Jefferies Remains Sidelined on FirstEnergy (FE) After Adjusting Forecast
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Jefferies reiterated a Hold rating on FirstEnergy Corp. (NYSE: FE), and raised the price target to $34.50 (from $34.00), after adjusting estimates. Jefferies has updated its forecast and no longer believes that management will defend the parent against a Moody’s downgrade. In 2017-18 Jefferies is forecasting FirstEnergy Solutions FFO/Debt in the 15-16% range which helps the parent credit metrics.
Analyst Anthony Crowdell commented, "We have revised our assumptions for equity needs and believe that management will not defend against a potential parent downgrade. With that being said we struggle to find FE as a compelling investment opportunity given 1) using a P/E valuation that ignores the $8.5B of parent debt and 2) the headwinds that a potential FES bankruptcy may bring."
Shares of FirstEnergy Corp. closed at $33.19 yesterday.
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