Wells Fargo Upgrades NorthWestern to Overweight, Sets $90 Price Target
Key Facts
On October 26, Wells Fargo upgraded NorthWestern from “Equal Weight” to “Overweight” and raised its price target to $90 from $70, according to Reuters coverage published via Investing.com. The bank linked the move to lower risks of completing the proposed merger with Black Hills, after staff at the Montana Public Service Commission recommended approval of the deal. That does not mean the deal is complete; it still requires a decision by the state regulator. Wells Fargo sees the combined entity potentially delivering 8.5% earnings-per-share growth after the deal closes. The higher target reflects the bank’s improved assessment of the company’s merger-related prospects, while regulatory approval remains a decisive step.
According to Reuters coverage, the staff recommendation is connected to a change in the distribution of the rate base across states if the merger is completed. Montana’s share of NorthWestern’s rate base is expected to fall from about 80–85% when the company operates on its own to about 31% after the merger. This decline reduces the rate base’s concentration in one state, one of the diversification benefits underpinning the deal’s assessment. The staff recommendation was conditional on four settlements and continued financial and operational risk ring-fencing, alongside a one-time $10 million credit for residential electric and gas customers in Montana. The proposal also included a prohibition on charging the state’s ratepayers for deal costs, executive termination benefits, company rebranding and certain transition expenses. The recommendation thus combines support for completing the deal with conditions aimed at protecting local consumers.
Wells Fargo estimated that earnings per share for current NorthWestern shareholders would be 10–19% above the company’s standalone projections at the time the agreement was signed, through 2029. It also expected per-share dividends to exceed standalone projections by 5–10% over the same period. This comparison is based on the company’s projected path as it stood when the agreement was signed, not on results achieved after the merger. In a separate estimate, the bank put earnings per share for the combined entity at $4.96 in 2028. Reuters coverage said that estimate is 11–19% above market consensus for 2027–2030. These figures remain forecasts tied to completion of the deal and the assumptions used by the bank.
The bank’s estimates included a need for $1.32 billion in equity financing to fund about $2.4 billion in capital investments added since the merger was signed. The figures indicate that the deal includes a broader investment plan than the one in place at signing, with its financing incorporated into Wells Fargo’s model. The merger agreement was announced in August 2025 and is an all-stock deal; each NorthWestern shareholder will receive 0.98 Black Hills shares upon closing. The two companies’ boards unanimously approved the agreement on August 18, 2025. According to NorthWestern’s second-quarter 2026 filing, the company expects to complete the deal by the end of that year, subject to approval by the Montana Public Service Commission and satisfaction of other closing conditions.
If the commission approves the deal, it will create Bright Horizon Energy, a regional utility expected to serve about 2.1 million customers in 8 states, with an estimated enterprise value of $15.4 billion. Montana Newsroom said the deal is structured as a stock exchange, with no acquisition premium or additional debt to complete it. The report said regulators in Nebraska and South Dakota, as well as the Federal Energy Regulatory Commission, have already approved the proposed merger. According to the same source, Montana’s decision is the remaining regulatory approval. The settlements also include a one-time $10 million credit for residential customers in the state, among the proposed terms for proceeding with the deal.
Staff at the Montana Public Service Commission recommended approval of the proposal, but the decision rests with the 5-member commission. The commission was scheduled to consider the deal on October 27, 2026, and issue its decision by November 12. The scheduled review comes one day after Wells Fargo’s upgrade, making the commission’s decision a near-term milestone in the deal’s progress. The company said in its second-quarter filing that it expects to close by the end of 2026, subject to Montana’s approval and completion of other closing conditions. EL7 data show that NorthWestern shares closed at $77.59 on October 23, 2026. That is the closing price for that day, not a live price on October 26.