UBS reiterates Buy on PG&E stock, cites wildfire liability reform

UBS maintained a Buy rating and set a price target of $22.00 for PG&E Corporation (NYSE:PCG), citing recent comments from Governor Newsom that wildfire liability reform could progress over the coming months. The reform is primarily aimed at reducing liability and could involve offsets from utilities. However, if significant reform does not take place, PG&E plans to inform investors about its revised capital allocation strategy.

This could potentially lead to a reduction in capital expenditure for California growth. Should the company opt to return more capital to shareholders, UBS anticipates dividend hikes over share buybacks. UBS believes the stock fails to account for legislative improvements and does factor in an 8.5% return on equity at the present 9.1x earnings estimate for 2028, which is below the permissible 9.98% in California.

Analyst Gregg Orrill retained the Buy rating and price target for PG&E. Separately, PG&E reported Q2 2026 earnings per share of $0.40, surpassing analysts' expectations of $0.36, but revenue of $5.9 billion fell short of the projected $6.12 billion. Despite the earnings beat, PG&E kept its full-year core EPS guidance of $1.64 to $1.66.

Meanwhile, in separate legal proceedings, a California state judge decided against automatically holding Southern California Edison liable for a 2025 wildfire, without a trial, following a request by insurance companies for the utility to be held responsible for property losses under state law.