Jefferies LLC on Jan. 5 downgraded PNM Resources Inc. to "hold" from "buy" and lowered the company's price target to $34.50 from $36.50.

"We are downgrading PNM to Hold from Buy and believe the stock is pricing in a near-perfect outcome in the utility's recently filed New Mexico electric rate case. Given the historic contentious nature of NM rate cases and the stock trading at a group average P/E multiple we see limited upside from here," Jefferies analyst Anthony Crowdell said in a report.

In December 2016, the company's Public Service Co. of New Mexico subsidiary filed for a rate increase of about $99 million predicated on a 10.125% ROE that would be implemented in two steps over two years commencing Jan. 1, 2018. The proposed increase would hike residential costs 13% and would also include a "lost contribution to fixed costs" rider for residential and small commercial customers.

The research group's downgrade was made in light of "a less than optimal decision" in PNM's previous New Mexico rate case, which denied recovery of costs related to the acquisition of an additional interest in the Palo Verde nuclear plant, leasehold improvements and balanced draft technology.

Jefferies also maintained its 2016 EPS guidance at $1.60, 2017 EPS at $1.80, and 2018 and 2019 EPS at $2.