Freedom raised Unitil’s target price to $55, reiterating a “Hold” rating

Tariff increases and business expansion support Unitil’s (UTL) long-term outlook despite weak Q3 results, according to Freedom Broker analysts Matvey Taits and Alibek Sagantai. The experts slightly improved their 2027–2028 earnings forecasts and raised the stock’s target price from $54 to $55. The “Hold” rating was maintained.

Unitil is a U.S. utility company providing electricity, gas, and water services in New England. It serves customers in the states of Maine, Massachusetts, and New Hampshire. Business development depends on infrastructure investment and regulator-approved tariffs.

Revenue rose, but the loss widened

According to the quarterly report, Unitil’s revenue increased 11.4% year over year to $112.6 million. The result was 4.2% below Freedom’s forecast and 0.4% below the market consensus.

Net loss increased from $0.3 million to $1.5 million, or from $0.02 to $0.08 per share. The market had expected a loss of $0.9 million. Excluding acquisition-related expenses, the adjusted loss was $0.04 per share versus a profit of $0.03 a year earlier.

Combined adjusted gross profit in the electric and gas segments together with water-supply revenue rose 12.4% to $67.1 million. The increase was driven by higher tariffs, an expanded customer base, and acquired companies. However, the figure was $3.1 million below Freedom’s estimate.

Costs also added pressure. Operating and maintenance expenses grew 22.4% to $26.8 million, and interest expense rose 23.6% to $11 million. As a result, the rise in revenue did not translate into higher quarterly profit.

Full-year guidance was maintained

For the first nine months, adjusted earnings per share increased 4.4% to $2.12. Management reaffirmed its full-year guidance of $3.20–3.36. Freedom expects adjusted EPS of $3.29, near the midpoint of the company’s range. At the same time, the 2026 EPS forecast under U.S. GAAP was lowered from $3.22 to $3.19 per share.

Analysts note that Q3 is seasonally the weakest for Unitil. Therefore, even small deviations in revenue and expenses in dollar terms have a noticeable impact on bottom-line earnings. Meeting the full-year forecast will depend, among other things, on weather during the heating season and cost control.

What supports results in the coming years

Rate decisions remain an important source of growth. In 2027, another rate increase for Unitil Energy Systems is expected, along with decisions on the filings of the gas distribution company Northern Utilities.

Unitil’s regulated asset base—the value of infrastructure on which the company can earn a regulator-set return—reached $1.39 billion. That is $0.2 billion more than a year earlier; acquisitions accounted for about half of the increase.

Freedom raised its 2027 EPS forecast from $3.45 to $3.47 and its 2028 forecast from $3.61 to $3.66. The main risks are associated with rising costs, the terms of rate decisions, and the need to raise financing for the investment program.

Why the target price rose after a weak quarter

The increase in the valuation to $55 is mainly due to rolling the calculation horizon forward to the next 12 months, taking into account quarterly dividends. Freedom’s model is based on valuing future dividend payments. Unitil’s quarterly dividend was maintained at $0.475 per share.

Earlier, Freedom Broker highlighted infrastructure expansion and growth of the customer base among the arguments in favor of Unitil. These factors continue to support the business; however, the new target price is close to the $54.84 quote used in the report. 

This is not an individual investment recommendation.