We derive a price target of $80 based on the average from the inputs of the following four valuation methodologies:  
Comparable Company Analysis – Price-to-Earnings: We use a PE multiple of 20.0x on 2026 utility earnings, which results in $82 of equity value.
Discounted Cash Flow: We use a CAPM and terminal PE multiple of 20.0x on 2026 net income, which results in an equity value of $64.
Rate Base Multiple: We use a rate base multiple of 1.7x on 2026 estimated rate base, and we reduce this value by net debt, which results in a value of $97.
DDM: Our DDM valuation yields a value of $76 based on CAPM.
We value wildfire liability at $0 since the base case amount is likely to cover by insurance.

Election and Regulatory – XEL is exposed to the regulatory relationships that govern its ability to generate earnings and cash flow. We would expect the stock to outperform if the regulatory relationship improves and the stock to underperform if relationships weaken.
Capital Markets Risk – The company is exposed to the equity issuance market and continues to be a regular debt issuer. If markets become closed to XEL or available at less attractive rates, then XEL stock could be adversely impacted.
Interest Rates – Xcel Energy is exposed to interest movements. The company is also exposed to interest rates in its nuclear decommissioning trust in NSP-Minnesota and in its pension plan.
Wildfires - 1) Xcel is exposed to potential impairment of regulatory environment  in light of wildfires, 2) Xcel is exposed to increase in cost of financing and added dilution if it finances wildfire liability outside of insurance, 3) Litigation is uncertain and facts continue to emerge, 4) Insurance execution risk, and 5) If wildfire risk remains high going forward, investors may assume material future wildfire liability risk for future years. As we witnessed for other utilities, it may take years for the companies to derisk these types of risks.
IRA Tax Credit Policy - XEL is exposed to renewables tax credit and transferability policies. If these incentives were to go away, there might be cash leakage and/or incremental equity dilution to XEL. 
Beyond the above, XEL’s stock price has historically been correlated to the interest rate changes and capital market environment.
If the impact on the company from any of these factors proves to be greater/less than we anticipate, we believe the stock will likely have difficulty achieving our target price or could outperform it.