Goldman Sachs Upgrades Duke Energy to 'Buy' on Strong Growth Outlook and Favorable Valuation

Publication Date: June 25, 2025

Goldman Sachs has significantly bolstered its outlook on Duke Energy (NYSE: DUK), elevating the utility giant's rating from 'Neutral' to 'Buy'. This upgrade is accompanied by a revised price target of $132, signaling a potential 17% upside from current levels. The investment bank's more optimistic stance is rooted in a confluence of factors, including Duke's robust growth trajectory, tangible progress in regulatory affairs, and an attractive relative valuation.

Key Catalysts Driving the Upgrade

Goldman Sachs pinpointed several critical drivers underpinning its bullish assessment of Duke Energy:

• Accelerated Capital Expenditure Growth: A primary catalyst is Duke's projected strong capital expenditure (capex) growth through 2029. This expansion is particularly pronounced in the Carolinas, a region experiencing accelerating electricity demand. Goldman Sachs anticipates Duke will be uniquely positioned to capitalize on this trend more effectively than its industry peers. This advantage is partly attributed to Duke's strategic partnership with GEV, which is expected to facilitate the more rapid deployment of new gas generation capacity, aligning with the region's increasing energy needs.

• Improving Regulatory Environment: The regulatory landscape for Duke Energy is showing clear signs of improvement. The company has successfully navigated recent rate cases in both the Carolinas and Florida, securing outcomes that are favorable to its operational and financial stability. Furthermore, the establishment of a clear framework for large-load customers enhances visibility and contributes to greater earnings predictability. This regulatory clarity reduces uncertainty and provides a more stable foundation for future growth.

• Compelling Valuation: From a valuation perspective, Duke Energy presents a compelling investment case. The stock currently trades at a 6% discount to its premium utility peers when assessed on a forward price-to-earnings (P/E) basis. Goldman Sachs views this discount as unwarranted, especially given Duke's promising growth profile and demonstrated operational advancements. The firm believes that as the market recognizes these strengths, the valuation gap is likely to close, driving share price appreciation.

Strategic Implications and Future Outlook

The upgrade from Goldman Sachs underscores a growing confidence in Duke Energy's strategic direction and operational execution. The focus on high-growth regions like the Carolinas, coupled with effective regulatory engagement, positions Duke to capture significant market opportunities. The partnership with GEV for gas generation capacity is a testament to Duke's proactive approach in addressing evolving energy demands and ensuring supply reliability.

Investors are likely to view this upgrade as a strong endorsement of Duke's long-term potential. The combination of sustained capital investment, a supportive regulatory backdrop, and an undervalued stock price creates a favorable environment for DUK shareholders. As Duke continues to execute on its growth initiatives and regulatory strategies, the company is well-positioned to deliver consistent returns and potentially outperform its sector peers.

This analysis suggests that Duke Energy is not only addressing current market demands but also strategically preparing for future energy needs, reinforcing its position as a leading utility in the evolving energy landscape.