Jefferies Raises Price Target on Allegheny Energy (AYE), Maintains Hold Rating

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AYE Hot Sheet

Rating Summary:
1 Buy, 2 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
Up: 20 | Down: 11 | New: 38

Jefferies is maintaining their Hold rating on shares of Allegheny Energy (NYSE: AYE) as they believe that they are fairly valued considering that they are currently trading at a slight discount to the merger offer price. They state that under he agreement, Allegheny shareholders would receive 0.667 shares of FirstEnergy stock for each share of Allegheny they own. The company reported they 4Q10 operating EPS of $0.62 when the firm was estimating $0.45. They are maintaining their FY11 and FY12 EPS estimates of $1.80 and $1.05 but are increasing their price target by $1.50 to $25.50.

Jefferies comments that, "The earnings at both AYE Supply and FE Supply are projected to deteriorate due to the decrease in power and natural gas prices and roll off of above market hedges, which will make it difficult for the companies to achieve projected level of synergies. We expect the merger to close shortly, at which point the company will provide combined earnings guidance."

For more ratings news on Allegheny Energy click here and for the rating history of Allegheny Energy click here.

Shares of Allegheny Energy closed at $25.18 yesterday, with a 52 week range of $18.97-$26.95.

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