PG&E's (PCG) investors initially viewed the process as an opportunity for a solution to California's wildfire liability framework, but wildfire bill SB 492 boosts survivor protections while failing to address the financing risks that utilities face, BofA Securities said in a note Tuesday.

BofA noted that PG&E has said the "bill lacks the durability needed to attract affordable capital," which according to the company's management will "require it to reassess capital allocation and long-term investment."

The investment firm said that SB 492 "does not materially improve the utility liability framework, limit insurance subrogation, reform inverse condemnation or provide a durable Wildfire Fund solution."

"The bill addresses visible survivor priorities while leaving PCG's central financing and liability concerns unresolved," the note said.

BofA said that the company's $73 billion capital plan and over 9% EPS growth guidance for the 2027-3030 period were based on a "constructive legislative outcome." The analysts said they have now removed $7.3 billion from the roughly $23 billion of capacity and new business investment in the plan, while keeping safety, reliability and other required spending.

The investment firm lowered the company's 2027 and 2028 EPS estimates to $1.78 and $1.90, respectively.

BofA downgraded PG&E to neutral from buy and cut the company's price target to $13 from $24.

Price: 13.23, Change: -0.04, Percent Change: -0.34