Deutsche Bank Upgrades FirstEnergy Corp. (FE) to Buy
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Deutsche Bank upgraded FirstEnergy Corp. (NYSE: FE) from Hold to Buy with a price target of $37. Analyst Jonathan Arnold said its transition is underway.
"FE’s ongoing transition involves refocusing on regulated utility growth, while de-emphasizing merchant power. The path is not risk-free, but we see good value (>10% upside and 4.3% yield) and a decent entry point after relatively subdued reaction to recent regulated wins (Ohio ESP, PA settlement). Next Friday should bring an updated outlook and we expect FE to confirm that equity issuance – while substantial – will be lower than high estimates. While a Moody’s parent d/g may follow, implications for core regulated earnings are limited. Our $37 PT includes a sizable 5-10% execution discount on regulated, parent EPS and no net merchant value given competing puts and takes," said Arnold.
Shares of FirstEnergy Corp. closed at $33.34 yesterday.
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