The catastrophic fires in Southern California are shaking up the stock value of Edison International, the parent organization of Southern California Edison, amidst increasing allegations and litigation regarding the company’s possible involvement in igniting the fires.
Edison International shares finished at $61.16 on Thursday, after falling 23% this month. The stock’s closing price was roughly the same as Wednesday’s, marking it as one of the poorest performers on the Standard & Poor’s 500. The recovery followed an upgrade by Ladenburg Thalmann analysts, who adjusted their rating on the stock. They indicated that their price target of $56.50 per share represents the worst-case scenario concerning the ongoing wildfires and changed their rating from sell to neutral.
“At this juncture, it is too soon to determine what the implications will be regarding the fires’ effects on the solvency of the California Wildfire Insurance Fund or on Edison International’s forthcoming profits,” the analysts noted, as reported by Barron’s. They added, “An early evaluation of SCEs’ role in fire incidents is unlikely to take place until the summer of 2025 at the earliest.”
After wildfires a few years back diminished Wall Street investors’ trust and prompted rating agencies to threaten downgrades to California’s investor-owned utilities, state lawmakers established the wildfire fund.
Market analyst Zacks lowered its rating on Edison International from Outperform to Neutral following last week’s fire outbreak. Although Zacks anticipates an increase in Edison’s operational revenue from 2025 to 2026, it also observes that “the company is facing significant costs related to wildfires” and “higher-than-expected decommissioning expenses.” This could considerably influence grades.
Another analyst, RBC Capital Markets, as recently as October referred to Edison as a “high-quality operator whose top-tier mitigation strategies enhance investor confidence in wildfire hazards,” expressing an optimistic view.
The repercussions from the fire represented an abrupt interruption for the firm, which had experienced swift growth in recent months. In its latest quarterly report, the company disclosed a profit of $516 million, or $1.33 per share, in contrast to a profit of $155 million, or 40 cents per share, in the same quarter last year.
“In recent years, our team has accomplished remarkable feats in addressing unprecedented climate change, bolstering the resilience of our operations, and positioning ourselves for future expansion,” stated President Pedro J. Pizarro in the report. “We are prepared with a robust stance.”
Fire officials are probing whether downed Southern California Edison utility apparatus contributed to the ignition of the 800-acre Hearst Fire near Sylmar, as confirmed by company representatives.
The company issued a report on Friday indicating that a downed conductor was identified on a pylon close to the Hearst fire, though “it remains unclear whether the observed damage occurred prior to or post the fire.” The California Department of Forestry and Fire Protection noted that the fire was nearly entirely contained.
SCE is also being examined for its potential involvement in sparking the Eaton Fire, which scorched 14,000 acres, obliterated thousands of structures, and ravaged Altadena, resulting in at least 17 fatalities.
On Tuesday, the Newport Beach law firm of Bridgford Gleason & Artinian filed a lawsuit in Los Angeles County Superior Court against SCE in relation to the Eaton Fire on behalf of victims, including Jeremy Garcey, whose Altadena property was devastated by the fire. A class action lawsuit was submitted.
“Informed by our investigation, conversations with several consultants, SCE’s public declarations, and video evidence depicting the cause of the fire, the Eaton Fire ignited because SCE neglected to turn off power to overhead power lines that intersect Eaton Canyon. This occurred despite the National Weather Service issuing a red flag PDS wind warning the day before the fire transpired,” attorney Richard Bridgford stated in a declaration.
The firm has previously represented over 10,000 California fire victims in lawsuits against Pacific Gas & Electric Co. and SCE. Bridgford mentioned to Yahoo Finance that his mailbox is overflowing with requests from Southern Californians wishing to participate in the Eaton fire lawsuit, and anticipates “hundreds of individuals will join.”
On Wednesday morning, sections of Los Angeles and Ventura counties were returned to the most severe fire warning level, “particularly hazardous conditions,” heightening fears of new outbreaks.
“The threat is not finished yet,” Los Angeles Fire Department Chief Christine Crowley remarked at a press conference on Wednesday. “So please prioritize your safety.”