Last Update 11 Jan 26

PEG: Data Center Demand And Storage Alignment Will Drive Future Upside

Analysts have nudged their price targets on Public Service Enterprise Group higher into a band around the low to mid $80s to low $100s, citing valuation support along with expectations for steadier revenue growth, slightly stronger profit margins and a modestly lower future P/E multiple.

Analyst Commentary

Recent research on Public Service Enterprise Group points to a mix of optimism around valuation support and growth opportunities, balanced by some caution around regulation and project visibility. Here is how the Street is framing the story right now.

Bullish Takeaways

Bullish analysts have raised ratings and targets into the high $80s to low $90s range, arguing that the current share price offers what they see as an attractive entry point relative to their expectations for the business.
Several upgrades explicitly cite valuation, with some analysts highlighting PSEG as a laggard in the utility peer group in 2025, which they see as a potential setup if execution and sentiment improve.
Supporters describe the company as politically adept in its home state, and see potential alignment between future storage investments and regulatory objectives, which they believe could help project approvals and long term capital deployment.
Coverage initiations in the high $80s to low $90s price target range and Buy ratings are tied to a broader view that integrated utilities with constructive regulation and room to add generation assets over time could benefit from higher power demand.

Bearish Takeaways

Bearish analysts, or those taking a more cautious stance, maintain Market Perform or Equal Weight views with targets clustered in the low to high $80s, signaling that they see limited upside relative to current prices based on their assumptions.
Some research flags regulatory and political risk around New Jersey, including references to noisy elections and concerns about potential rate freezes, which could pressure returns on new investment if outcomes are less favorable.
Cautious commentary points to a lack of material updates on nuclear contracting or near term generation build decisions, suggesting that visibility on certain growth projects is still constrained.
Even within supportive sector calls, PSEG is not always highlighted as a top idea, which implies that some analysts see better risk reward elsewhere in the utilities group despite recognizing sector wide themes like data center driven power demand.

What's in the News

PSEG announced that the New York State comptroller has given final approval to extend its operations services agreement with the Long Island Power Authority, covering operation of the electric grid on Long Island and in the Rockaways through Dec. 31, 2030 (Key Developments).
The LIPA Board of Trustees previously awarded PSEG Long Island a five year extension on Sept. 25, with the agreement gaining approval from the New York State attorney general in October before receiving comptroller sign off (Key Developments).
PSEG Long Island has operated the electric grid on behalf of LIPA since 2014, and the newly approved extension is scheduled to begin on Jan. 1, 2026 (Key Developments).

Valuation Changes

Fair Value: The model fair value estimate remains unchanged at $89.50.
Discount Rate: The discount rate is effectively unchanged, moving from 6.956% to 6.956%.
Revenue Growth: The revenue growth assumption has increased modestly from 4.30% to about 4.86%.
Net Profit Margin: The net profit margin assumption has increased slightly from roughly 18.50% to about 18.53%.
Future P/E: The future P/E multiple assumption has decreased slightly from 22.26x to about 21.86x.

Surging electricity demand and policy support strengthen PSEG's revenue growth, asset base, and long-term earnings visibility in a rapidly modernizing, clean energy-focused market.
Enhanced grid investments, regulatory alignment, and operational execution position PSEG to benefit from both rate increases and new regulated revenue opportunities.
Heavy dependence on uncertain data center demand, regulatory approval risks, and political uncertainties threaten PSEG's earnings growth, margin stability, and long-term return potential.

Catalysts

About Public Service Enterprise Group

Through its subsidiaries, operates in electric and gas utility, and nuclear generation businesses in the United States.What are the underlying business or industry changes driving this perspective?

Growing demand for electricity driven by rapid data center expansion, economic development, and transportation electrification in New Jersey and the surrounding PJM region is driving a significant increase in large load connection requests (pipeline up 47% quarter-over-quarter). If these inquiries convert to utility customers, they will support revenue growth and expand the customer base, positively impacting long-term top-line revenue and rate base growth.
Sustained and increasing levels of utility capital investment ($3.8B in 2025; $21–24B through 2029) focused on grid modernization, infrastructure resilience, and clean energy programs position PSEG to capture value from regulatory-approved rate increases and expand its regulated asset base, driving future earnings and net margin growth.
Ongoing policy and regulatory support for decarbonization and clean energy (e.g., zero-emission credits, capacity price collars, federal nuclear PTC availability, and bonus depreciation) provide highly visible and stable long-term cash flows from the nuclear fleet and incentive alignment that sustains or improves net margins amidst rising clean electricity demand.
PSEG's successful execution of energy efficiency investments, customer support programs, and storm response efforts strengthen its regulatory relationship and enhance its ability to recover costs and earn on new capital, supporting stable and predictable earnings growth.
Resource adequacy issues in the region, growing reliability concerns, and New Jersey's increasing dependence on imported power create potential catalysts for new in-state generation and regulatory changes; this favors regulated utilities like PSEG, which are positioned to invest in grid solutions and new generation, potentially unlocking new regulated revenue streams and further boosting long-term earnings visibility.

Public Service Enterprise Group Earnings and Revenue Growth

Public Service Enterprise Group Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Public Service Enterprise Group's revenue will grow by 3.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 17.8% today to 19.9% in 3 years time.
Analysts expect earnings to reach $2.5 billion (and earnings per share of $4.81) by about September 2028, up from $2.0 billion today. However, there is some disagreement amongst the analysts with the more bullish ones expecting earnings as high as $2.7 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.4x on those 2028 earnings, up from 20.2x today. This future PE is greater than the current PE for the US Integrated Utilities industry at 19.7x.
Analysts expect the number of shares outstanding to grow by 0.17% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Public Service Enterprise Group Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

PSEG's significant future earnings growth relies on converting a large pipeline of data center load inquiries into actual customers, but management estimates only a 10–20% conversion rate, and most prospects are not yet committed, creating material uncertainty for long-term top-line revenue.
New Jersey's current dependence on power imports (up to 50% during peak demand) and lagging in-state baseload generation additions highlight systemic resource adequacy issues that, if unresolved, could increase PSEG's supply costs or require costly investments, negatively impacting net margins and capital expenditures.
The company's lengthy and capital-intensive grid modernization and energy efficiency investments are subject to regulatory cost recovery and rate approvals-delays, political pushback on affordability, or shifts in policy could constrain PSEG's ability to earn return on invested capital, adversely affecting free cash flow and long-term earnings growth.
PSEG's increasing reliance on regulated returns and diminishing contribution from non-regulated businesses (due to its exit from merchant generation) narrows earnings diversification; regulated rates may be lower and less flexible, exposing PSEG to potential regulatory changes that could dampen earnings resilience and pressure future revenue growth.
Ongoing political and regulatory uncertainty around subsidies for nuclear generation (Zero Emission Certificates, PTCs) presents margin risks; any expiration, reduction, or political backlash against these credits would directly lower net income from existing nuclear assets, undermining long-term profitability projections.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $90.607 for Public Service Enterprise Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $105.0, and the most bearish reporting a price target of just $71.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $12.4 billion, earnings will come to $2.5 billion, and it would be trading on a PE ratio of 22.4x, assuming you use a discount rate of 6.8%.
Given the current share price of $79.99, the analyst price target of $90.61 is 11.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Data Center Demand And New Jersey Infrastructure Will Unlock Value