Citi upgraded Southwest Gas Holdings to a Buy rating, projecting the utility's earnings per share could grow faster than previously expected. The bank raised its price target to $99, arguing that pipeline expansions and regulatory changes will narrow its valuation gap with peers. Southwest Gas is now on Citi's positive catalyst watch list.

The upgrade hinges on progress with the Great Basin gas pipeline expansion and anticipated regulatory improvements in Arizona and Nevada. Citi expects Southwest to provide new EPS growth guidance with its fourth-quarter results, forecasting around 10.4% annual growth through 2030. The company's completed exit from its construction business also removes a long-standing overhang.

Citi added that Southwest Gas remains a potential takeover candidate, trading at roughly 1.25 times its 2025 rate base, near the low end for recent gas utility M&A multiples. The bank maintains a Neutral rating on MDU Resources, seeing its upside already priced in. Southwest Gas's valuation leaves room for a re-rating if the Great Basin project proceeds as planned.