Jefferies Cuts PT on El Paso Electric (EE) to $27 Following City Council Vote; Stock Could Underperform Moving Forward
EE Hot Sheet
Rating Summary:3 Buy, 2 Hold, 0 Sell
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Up: 20 | Down: 11 | New: 38
Jefferies lowered it's price target on El Paso Electric (NYSE: EE) from $29 to $27 Wednesday, while maintaining an Underperform rtating on the company.
Jefferies maintains that, following a vote by the El Paso City Council -- coning in at 9 - 0 -- for EE to Show Cause why it is over-earning, "will cause the stock to underperform other regulated electric companies."
EE has 120 days (no later than February 1, 2012) to file a rate case with the City. The City will have 185 days after the date to issue a final order. At the same time El Paso Electric files with the City the company will also file with the Public Utilities Commission of Texas (PUCT) for rates outside the city of El Paso. The Council will votes on October 25th on whether to institute interim rates.
Jefferies said it's maintaining 2012 and 2013 EPS estimates of $2.30 and $2.45, respectively. Commenting, "our estimates were previously reduced by $0.10 each year to reflect regulatory exposure with the City of El Paso and the potential for interim rates. If we were to use Councilwoman Niland’s suggestion of a $20 million rate cut our estimates would need to be reduced an incremental $0.20 per share. The company is expected to provide 2012 guidance at the earnings call in February and if interim rates are instituted we anticipate the ongoing guidance range will be impacted by these lower rates."
Click here for more analyst color on El Paso, or here for a ratings history.
El Paso shares are flat Wednesday morning.
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Jefferies maintains that, following a vote by the El Paso City Council -- coning in at 9 - 0 -- for EE to Show Cause why it is over-earning, "will cause the stock to underperform other regulated electric companies."
EE has 120 days (no later than February 1, 2012) to file a rate case with the City. The City will have 185 days after the date to issue a final order. At the same time El Paso Electric files with the City the company will also file with the Public Utilities Commission of Texas (PUCT) for rates outside the city of El Paso. The Council will votes on October 25th on whether to institute interim rates.
Jefferies said it's maintaining 2012 and 2013 EPS estimates of $2.30 and $2.45, respectively. Commenting, "our estimates were previously reduced by $0.10 each year to reflect regulatory exposure with the City of El Paso and the potential for interim rates. If we were to use Councilwoman Niland’s suggestion of a $20 million rate cut our estimates would need to be reduced an incremental $0.20 per share. The company is expected to provide 2012 guidance at the earnings call in February and if interim rates are instituted we anticipate the ongoing guidance range will be impacted by these lower rates."
Click here for more analyst color on El Paso, or here for a ratings history.
El Paso shares are flat Wednesday morning.
Discover Wall Street's best ratings calls with the pros - Ratings Insider Elite. Free Trial!
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