PG&E Corp: Moving to Neutral from Buy

We downgrade PCG to Neutral from Buy due to the growing risk of inaction on wildfire liability reform this year and the company's rescinding the long-term EPS growth rate guidance coincident with the strategic review announcement on 9/2. Over the last week Gov. Newsom has spoken of a potential special session on AI, not on wildfire, and gubernatorial candidate Xavier Becerra has been more vocal about taking on wildfire reform which delays the potential catalyst. We lower PCG's long-term EPS growth rate to 8.5% from 9.0% as we compound the company's $2 bln cap-ex deferral in '27 through '30. A risk to the call is consensus building on wildfire legislation that leads to action in a special session. We also recognise that tax loss selling pressure and interest rate risk make the stock incrementally less attractive. We lower our price target to $14 from $19 which reflects 49% Utility group P/E discount of 7.9x $1.90 in '28E less $1 for non-earning rate base and NPV of wildfire fund contrib