• Black Hills Corp (NYSE:BKH) is in the discovery phase of a potential merger with NorthWestern Energy, with regulatory approvals still pending.
• The company is also accelerating its data center pipeline to more than 3 gigawatts, with interest from major technology firms including Meta and Microsoft.
• These developments could reshape how Black Hills allocates capital between traditional utility operations and power demand from large scale tech clients.

Black Hills, trading at $72.3, has seen a 27.0% return over the past year and 42.1% over the past five years, which gives you useful context for these new developments. The stock’s value score of 3 and 3.8% return year to date suggest investors have already been reacting to company level moves, rather than just short term headlines. Against that backdrop, a potential merger and a multi gigawatt data center build out are important new pieces of information to factor into your view on NYSE:BKH.

For you as an investor, the key questions now are how a tie up with NorthWestern Energy might affect regulatory risk, capital needs and customer mix, and how quickly any data center commitments could translate into long term contracts. As more details emerge on merger terms, approvals and specific agreements with clients like Meta and Microsoft, it will become easier to judge whether NYSE:BKH’s recent share price and longer term returns still line up with the company’s evolving profile.

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Quick Assessment

• ⚖️ Price vs Analyst Target: At US$72.30 versus a US$80.50 consensus target, the share price sits about 10% below where analysts are looking, which is close to the fair band.
• ⚖️ Simply Wall St Valuation: Simply Wall St views Black Hills as trading close to estimated fair value, so the current price is not flagged as a big bargain or a major stretch.
• ✅ Recent Momentum: A 0.5% gain over the last 30 days suggests steady rather than dramatic short term moves while the merger and data center story unfolds.

Check out Simply Wall St's in depth valuation analysis for Black Hills.

Key Considerations

• 📊 The potential NorthWestern merger plus a 3+ GW data center pipeline could change Black Hills’ mix between regulated utility earnings and large tech power demand.
• 📊 Watch how regulators respond to the merger proposal, any updates on long term contracts with Meta or Microsoft, and whether the P/E stays below the 20.5x industry average.
• ⚠️ Interest payments are not well covered by earnings, so extra debt or capex tied to the merger or new data center projects is worth tracking closely.

Dig Deeper

For the full picture including more risks and rewards, check out the complete Black Hills analysis.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.