(Bloomberg) -- Tohoku Electric Power Co. shares surged the most since 2013, leading other Japanese utilities higher, on signs its Onagawa No. 2 nuclear reactor is on track for a restart around September.

The stock jumped as much as 12% in Tokyo after the company said it completed the required safety construction work for the reactor in Japan’s Miyagi prefecture. The regional utility had aimed to complete the task in June. 

Shares also surged after Mizuho Financial Group Inc. boosted its rating to buy from neutral on the approaching reactor restart, and prospects for better medium-term profitability. 

Power demand in eastern Japan is expected to increase, which could provide growth opportunities for the company, Mizuho analysts including Norimasa Shinya wrote in a note, raising its price target on Tohoku Electric to ¥1,700 from ¥1,000. They also raised their targets for Kansai Electric Power Co. and Shikoku Electric Power Co., sending their shares rising at least 5%.

“Given Japan’s unit production cost of nuclear energy is 19% cheaper than coal-fired energy and 27% cheaper than LNG energy, ramping up nuclear energy could improve the margin of power companies,” said Kelvin Ng, an analyst at Bloomberg Intelligence.

A measure of power companies was the best performer on the broader Topix index, which slid in morning trading. The gauge has risen about 32% this year, outperforming the Topix, supported by Japan’s plan to accelerate the restart of nuclear reactors, as well as by expectations demand will rise from the nation’s growing role in the semiconductor ecosystem.

Nuclear Shares Pull Ahead as Japan Rally Slows: Taking Stock

Mizuho raised its price target on Shikoku Electric to ¥1,600 from ¥1,160, saying the shares are still attractive based on its price-to-book ratio, and that its stable free cash flow and relatively healthy financial position is positive. The firm also boosted its target on Kansai Electric, from ¥2,900 from ¥2,400. The utility can generate “significant cash flow” with seven nuclear reactors in operation, it said.

--With assistance from Winnie Hsu.

(Adds chart, analyst comments and details from Mizuho report)

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