Citi analyst Praful Mehta upgraded PG&E (PCG) to Buy from Neutral while lowering his price target for the shares to $40 from $48.

In a statement yesterday, the California Public Utilities Commission indicated that it will apply a cap when evaluating wildfire-related expenses, including the 2018 fires, Mehta tells investors in a research note partially titled "CPUC Steps-Up Bigtime." The analyst does not think the CPUC would be "taking this aggressive step to support the utilities" without some support from the legislative side. He upgrades PG&E following the recent selloff in the shares.

The stock closed yesterday down 31%, or $7.85, to $17.74. This morning, however, the shares are up 51%, or $8.96, to $26.70 in premarket trading.