Avista shares fall 5% on customer loss, reduced 2026 guidance
Industrial customer departure will take $0.12 per share off utility earnings next year
Avista Corporation shares tumbled nearly 5% in pre-market trading Wednesday after the Spokane-based utility missed fourth-quarter expectations and warned that a major industrial customer's departure would weigh on 2026 earnings.
The company reported GAAP diluted earnings of $0.87 per share for the fourth quarter of 2025, falling short of analyst expectations of $1.04 by 16.3%. Quarterly revenue of $518 million also missed forecasts, coming in 1.8% below the projected $527.6 million.
More concerning for investors was the company's announcement that a large industrial customer notified Avista of plans to return to procuring power independently in the market beginning in 2026, sooner than anticipated. The customer, which had locked in electricity contracts during a period of elevated market prices, is exiting as power prices have declined.
The customer departure is expected to create a one-time negative impact of $0.12 per share on 2026 non-GAAP utility earnings. As a result, Avista initiated 2026 non-GAAP utility earnings guidance of $2.52 to $2.72 per diluted share, below previous analyst estimates of $2.80.
"The 2026 non-GAAP utility earnings guidance reflects this one-time decrease," said Kevin Christie, Avista's Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, on the earnings call.
The stock fell 4.9% to $40.55 in pre-market trading, extending recent pressure on shares that had been trading around $42 ahead of the results. The decline comes despite the company reporting full-year 2025 GAAP net income of $2.38 per diluted share, up from $2.29 in 2024, and non-GAAP utility earnings of $2.55 per share, compared with $2.38 in the prior year.
Avista's return on equity at its utility business is expected to fall to the low-to-mid 8% range in 2026, pressured by the Energy Recovery Mechanism, structural lag, and the departing customer. The company targets a long-term ROE of approximately 9% excluding ERM impacts.
The utility sector has faced broader challenges as energy markets stabilize following post-pandemic volatility. Large industrial customers often contract with utilities during periods of high wholesale power prices to secure predictable rates, then return to market-based procurement when prices moderate.
Despite the near-term headwinds, Avista management emphasized that the company continues to expect consolidated EPS to grow 4% to 6% from the 2025 guidance midpoint over the long term, suggesting the customer loss represents a temporary setback rather than a structural shift in the business.
Analysts maintain a "Hold" consensus rating on Avista shares, with the stock trading at roughly 18 times trailing earnings and yielding 4.6% through its quarterly dividend. The next dividend of $0.48625 per share is scheduled for March 13 to shareholders of record as of February 25.
The company serves approximately 760,000 electric and natural gas customers across Washington, Idaho, Oregon, and Montana, positioning it as a key utility provider in the Pacific Northwest region.