Scotiabank downgraded DTE Energy (NYSE: DTE) from Sector Outperform to Sector Perform with a revised price target of $147.00.

The firm said it remained constructive on DTE's long-term EPS growth outlook, which it projected at about 7.5% annually, above consensus and management's guidance. Analysts also noted Michigan's regulatory environment remained favorable.

However, Scotiabank argued the upside potential to DTE's guidance range of 6%-8% EPS growth was limited, and that investors were less interested in defensive utilities in the current risk-on market environment. The firm also pointed to Michigan's relatively weak traction in attracting data center customers as a headwind to sentiment. While expecting a positive financial update in the third quarter, the firm said valuation would likely remain rangebound compared to peers.