HSBC: NiSource expands investment plan, raises long-term growth target as it supplies power to data centers

How did third-quarter results change the full-year outlook?

NiSource’s adjusted EPS for the third quarter of 2026 was 0.27 dollars, above the 0.22 dollars expected by HSBC and the market consensus and the 0.19 dollars recorded a year earlier. Year-on-year growth was driven mainly by the Columbia business.
The company therefore expects 2026 adjusted EPS to fall in the upper half of its existing guidance range of 2.02–2.07 dollars, and issued its first 2027 guidance of 2.22–2.30 dollars.

The company plans to invest 40 billion dollars in 2027–2033, including 32 billion dollars in its core business and about 8 billion dollars in GenCo, its data-center-related power generation business. The previous plan called for 28.6 billion dollars of investment in 2026–2030; the two plans cover different periods. Under the new plan, investment in 2027–2031 is 29 billion dollars.
The company raised its target for compound annual growth in consolidated adjusted EPS for 2027–2033 from about 9%–10% to about 10%–11%. The core business is expected to achieve annual rate-base growth of about 8%–10% over the same period, and the company extended its target for annual adjusted EPS growth of 6%–8% from 2030 to 2033.
Beyond the existing plan, the company sees 3 billion dollars of investment opportunities in its core business and 4 gigawatts of GenCo projects still under development or in strategic negotiations. The latter will be included in the plan only after meeting the company’s minimum thresholds.

NiSource’s data-center project pipeline totals 9 gigawatts, of which about 5 gigawatts are under contract, another approximately 2 gigawatts are in strategic negotiations, and about 2 gigawatts are under development. The company provides customers with long-term power services and capacity; customers are responsible for building and operating the data centers.
Demand associated with Microsoft, Amazon and Alphabet is expected to ramp up fully by 2031, 2032 and 2030, respectively. Under the 8 billion-dollar GenCo investment plan, the company targets EPS for the business rising from 0.05–0.09 dollars in 2027 to 0.32–0.40 dollars in 2030 and 0.52–0.68 dollars in 2033.

The company expects the proportion of capital expenditure covered by operating cash flow to rise from 45%–50% under the previous plan to 55%–60%, with the share funded by new debt falling to 30%–35%. Equity issuance accounts for 5%–8%, and minority shareholder contributions for about 3%–5%. The company still expects to issue 400 million–600 million dollars of equity annually in the near term, falling to very little from 2032 onward.
HSBC forecasts 2027 operating cash flow of 2.756 billion dollars, capital expenditure of 6.75 billion dollars and free cash flow before dividends of negative 3.994 billion dollars. The company aims to maintain an annual funds from operations (FFO) to debt ratio of 14%–16% through 2033, relying on core-business cash flow and cash flow growth after GenCo assets enter service.
HSBC maintained its buy rating and raised its price target from 49.50 dollars to 51.50 dollars: the bank increased its 2027 EPS forecast from 2.22 dollars to 2.28 dollars and its target price-to-earnings multiple from 22.3 times to 22.6 times. Project execution delays, regulatory limits on returns or weaker external demand could cause growth to fall short of expectations.