Jefferies Cuts Price Target on PG&E Corp. (PCG) to $70.00 Following CPUC Testimony
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Jefferies maintained a Buy rating on PG&E Corporation (NYSE: PCG), and cut the price target to $70.00 (from $71.50), following the CPUC testimony in PCG's TO18 rate case. The CPUC took issue with, among other things, PG&E's calculation of its base ROE, which the CPUC said was calculated incorrectly, and the 50 bps RTO participation adder. In TO16 and TO17, the CPUC made a nearidentical filing as well as requests for rehearing. In all three cases, the FERC rejected the CPUC request to deny the CAISO adder.
Analyst Anthony Crowdell commented, "On 8/19, the CPUC filed testimony in PCG's TO18 rate case at the FERC arguing, among other issues, that PG&E's requested base ROE was incorrectly calculated and is too high, and that PG&E's 50 bps RTO adder should not be summarily authorized. We don't believe the FERC will take issue with the base ROE or adder, and do not see the CPUC filing as heightened risk of a lower ROE when the CA utilities file for '18 cost of capital in April."
Shares of PG&E Corporation closed at $62.10 yesterday.
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