Sempra (SRE) is getting a fresh look from Wall Street, and Texas is the reason why. Goldman Sachs analyst Carly Davenport upgraded the utility giant to Buy from Neutral, bumping her price target from $88 to $106. The thesis? Sempra's increased focus on its Texas operations should deliver meaningful earnings growth over the next several years.

At the heart of this bullish call is Oncor, Sempra's Texas utility subsidiary. Davenport believes Oncor is perfectly positioned to capitalize on several powerful tailwinds sweeping through the state. Data centers are multiplying across Texas, drawn by cheap land and energy infrastructure. Meanwhile, businesses and people keep relocating to the state, driving population and economic expansion.

Texas also offers something utilities love: a constructive regulatory environment. Translation? Getting projects approved and earning returns on invested capital tends to be smoother sailing there than in many other states.

Management isn't sitting idle. The company plans to increase capital investments in its Texas operations by at least 30%, and Davenport thinks there's upside even beyond that figure.

The numbers tell the story. After accounting for the expanded capital plan in Texas, Goldman now expects Oncor's EPS growth to hit approximately 21% annually from 2025 through 2029, up from a previous estimate of 15%. For the consolidated company, EPS growth is now projected at over 10% during that period, compared to roughly 9.5% before.

Shares of Sempra traded up 0.81% to $92.97 at the time of the upgrade on Friday.