Con Edison Trades at All-Time High Even as the Worst-Rated Blue Chip

(Bloomberg) -- Consolidated Edison Inc., the utility that powers New York and the surrounding area, is on quite a run, having hit an all-time high earlier this week and holding there as the stock market sells off. 

But there’s a twist: The company is also the worst-rated member of the S&P 500 Index. It has nine sell ratings, seven holds and just one buy. The Bloomberg consensus rating on the shares is 2.06 -- anything under 2.0 is considered a sell. One more downgrade would put it there.

While analysts are bearish, investors have been buying the stock amid a broader push into value and defensive names. Con Edison is up more than 14% this year compared with a roughly 5% gain in the S&P 500 Utility Index and a 10% decline in the S&P 500. The company also said on Thursday that it was holding its dividend at 79 cents this quarter, which also could support the shares.

“We think the market does not appreciate the impact inflation and higher interest rates are going to have on all of the growth potential on utilities,” said Morningstar analyst Travis Miller, who has a sell rating on the company.

Con Edison representatives didn’t immediately respond to requests for comment.

The company is facing some significant capital expenditures, and is trying to sell clean energy assets to raise cash, Miller said. If that fails, Con Edison will likely need to tap the debt markets as interest rates are rising, which will eat into future returns. This is a key reason for analysts’ bearishness, even as the shares have been on a record run.

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