(Bloomberg) — Shares of Hawaiian Electric Industries Inc. posted their worst weekly drop in at least four decades on concern it could be responsible for the fires ravaging Maui, with a Wells Fargo analyst warning that potential liabilities could be large enough to wipe out the arm’s value. own benefit.
Most Read from Bloomberg
The stock is down 58% this week, the biggest drop in data going back to 1980. The sell-off was prompted by concern among investors that the company’s power equipment may have started the fire, though no official cause has been identified yet.
The risks prompted investors and Wall Street analysts to deeply backtrack their expectations for the company, which also owns US savings bank FSB. Guggenheim analyst Shahryar Pouriza pulled his price target for the stock, saying that “the shares are untouchable.” At Wells Fargo, Jonathan Reader slashed his estimate to $8 from $25, advising clients to assume the utility business is now virtually worthless.
“We believe it is prudent to assume the utility value is $0/shillings” as the economic losses are likely to run into the billions of dollars, far exceeding the value of the property before the wildfires, “Reder told clients in a note.
The aftermath of the wildfires bankrupted PG&E Corp. Maui’s death toll has already surpassed that, making the fires the deadliest in the United States in over a century.
Hawaiian Electric pared some of the decline on Friday, rising 14% after the company said in a statement that it was seeking expert advice. Hawaii Electric also said there is no precedent in Hawaii for enforcing the kind of legal principle like that demonstrated in the California utility collapse.
“The goal is not to restructure the company, but to survive as a strong financial benefit that Maui and this state need,” the company said in the filing.
The company did not respond to a request for comment on analysts’ opinions.
The stock fell for eight consecutive days before Friday’s rebound, and the value of the company’s banking unit may provide a cap on how low the price can go. Because of this, Wells Fargo’s Reeder upgraded the stock to an equivalent rating of hold, saying much of the risk has been mitigated by this week’s sharp decline.
“The exact downside from here is less clear because, at the very least, we think the bank has value,” Reader wrote.
With the help of Carmen Renick.
(It updates stocks and market closing chart.)
Most Read by Bloomberg Businessweek
© 2023 Bloomberg LP