PG&E Corp. shares plunged 22.34% on Monday, Jan. 7, dragging the whole electric and diversified utility sector down amid reports that the company may sell its gas utility business or file for bankruptcy protection over concerns about the company's potential liability for damages caused by wildfires in California last fall.
Meanwhile, broader markets and other energy indices closed the trading day with gains as the Dow Jones Industrial Average rose 0.42% to 23,531.35, and the S&P 500 advanced 0.70% to 2,549.69.
Shares of PG&E Corp. opened at $18.50 on Jan. 7, down 24% from the Jan. 4 stock market close. According to analysts, PG&E subsidiary Pacific Gas and Electric Co. would realize few benefits from selling off its gas utility assets, even as the company stares down potential multibillion-dollar liabilities in the wake of wildfire devastation.
The company's stock price closed at $18.95 on more than triple average volume.
Guggenheim Securities LLC downgraded American Electric Power Co. Inc. and OGE Energy Corp., among other utilities, to "neutral" from "buy," and upgraded CenterPoint Energy Inc. and NiSource Inc. to "buy" from "neutral."
Analyst Shahriar Pourreza advised investors to focus on individual stocks in 2019 because of "limited upside and downside potential" in a broader utility portfolio. "[W]e have become very selective," Pourreza wrote in the report.
AEP declined 0.56% in active trading to close at $73.03, and OGE shed 0.54% on strong volume to settle at $39.00, while CenterPoint added 0.38% in brisk trading to end at $28.79, and NiSource picked up 0.55% on light volume to finish at $25.68.
PPL Corp. was up 0.14% in below-average trading to settle at $28.91. CreditSights downgraded the company to "market perform" from "outperform," citing current spreads, relatively weak metrics and the continued risk at its U.K. electric distribution business.
SolarEdge Technologies Inc. lost 6.01% in robust trading to finish at $35.01, following the news that it will acquire Italian electric vehicle company S.M.R.E. S.p.A. for roughly $77 million. SolarEdge expects the initial 51% purchase of SMRE to reduce its cash balance by roughly $39 million and plans to issue approximately 1.1 million shares of common stock.
The S&P 500 Utilities Sector dropped 0.71% to close the day at 266.08.
In the oil and gas sector, QEP Resources Inc. soared 40.30% on nearly 6x average trading volume to $8.53 on the heels of Elliott Management Corp.'s $2 billion takeover proposal for the oil driller focusing on the Permian Basin. The firm offered $8.75 per share in cash, or a 44% premium over QEP's closing price Jan. 4.
Range Resources Corp.'s stock price advanced 4.12% in strong trading to end at $11.13, after the company announced that its 2018 capital spending came in about $20 million lower than its budget of $941 million. The company also estimated its production in the fourth quarter of 2018 to be about 2.15 Bcfe/d after losing approximately 10 Bcfe of production.
Kinder Morgan Inc. gained 2.16% on below-average volume to close at $16.59, after S&P Global Ratings upgraded the company's corporate credit rating to BBB from BBB-, citing the gas pipeline giant's decision to use the $2 billion of proceeds from the sale of a beleaguered Canadian project for debt repayment.
Shares of Suncor Energy Inc. increased 1.30% in active trading to $29.70. The company reported 12% quarter-over-quarter growth in upstream production, as production at the Fort Hills oil sands project exceeded the company's guidance of 90% utilization for the fourth quarter of 2018.
The S&P 500 Energy Sector saw a 1.29% increase to close at 449.14, and the Alerian MLP Index earned 1.75% to conclude at 243.13.
Market prices and index values are current as of the time of publication and are subject to change.