Jefferies Downgrades PG&E Rating, Wildfire Liability Reform Outlook Dims

LootboxPhobia · 2026-03-23T19:11:11+00:00

Jefferies downgraded PG&E's rating from "Buy" to "Hold" due to weakening prospects for wildfire liability reform and the stock price already reflecting optimistic expectations. They noted that after discussions with stakeholders, there is limited political support, and the feasibility of reform remains unclear. PG&E's stock has risen over 20%, but risks could shift toward disappointment.

LootboxPhobia

2026-03-23 19:11:11

Abstract generation in progress

Investing.com - Jefferies has downgraded PG&E Corporation from Buy to Hold, citing diminished prospects for meaningful wildfire liability reform and the stock price already reflecting optimistic expectations.

The broker stated that recent discussions with stakeholders indicate limited political support for structural reforms that shift wildfire liabilities away from utility companies. A key obstacle remains the lack of alignment between utility companies and insurers, with the insurance sector resisting changes to existing risk-sharing arrangements.

Follow every rating and target price change with InvestingPro — 50% off

Investors are focused on the recommendations under California SB 254 Phase Two framework, expected to be released on April 1. Jefferies said the report is unlikely to provide a clear or feasible path forward but will outline policy options for legislators. The firm also noted uncertainty over whether Governor Gavin Newsom will push controversial reforms later in his term.

PG&E’s stock has risen over 20% since its January lows, driven by expectations of favorable policy outcomes. Jefferies noted that the stock has become a crowded position, with investors increasingly pricing in reforms that may not materialize.

The firm added that while incremental measures (such as liability caps) remain possible, broader reforms to wildfire liability rules seem unlikely. Without these changes, the firm believes there is limited room for further revaluation.

Jefferies also pointed out that wildfire risk increases entering the 2026 fire season, as below-average snowfall in California raises the likelihood of fire activity. However, the firm stated that higher risk may not translate into legislative urgency.

Given the reduced likelihood of reform and recent stock gains, Jefferies believes the risk-reward balance is shifting toward disappointment rather than further upside.

This article was translated with AI assistance. For more information, see our Terms of Use.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

1 Likes