Deutsche Bank Cuts PG&E (PCG) to Hold as Co. Faces Criminal Charges for San Bruno Accident

March 28, 2014 6:56 AM EDT
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Price: $60.58 --0%

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Deutsche Bank downgraded PG&E Corporation (NYSE: PCG) from Buy to Hold with a price target of $45.00. The change comes as PG&E faces criminal charges in connection with the 2010 San Bruno natural gas transmission pipeline accident.

Analyst Jonathan Arnold said, "For overhang-weary PCG investors news of a new front in the San Bruno cases is most unwelcome. That this came on the same day that EIX effectively put SONGS behind it is doubly galling. While an initial analysis suggests federal charges may not pack anything like the financial punch as the California PUC process, we have no real visibility on this."

"Meanwhile, clarity may be pushed out even further, and we are also concerned that PCG may now have to raise equity to fund a CPUC penalty under the overhang of a new criminal case. Up till now we have felt those waiting for the equity deal to get in were risking missing the boat; now with the stock up 8% YTD this new twist recalibrates our view of risk-reward. The real prize for PCG investors remains a post overhang premium P/E – such as we now give to EIX. We still see this as an ultimate destination for PCG, but pathway and timing are now less clear and we see insufficient downside protection given issuance needs ahead," added the analyst.

For an analyst ratings summary and ratings history on PG&E Corporation click here. For more ratings news on PG&E Corporation click here.

Shares of PG&E Corporation closed at $43.64 yesterday.

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