UBS Cuts Price Target on PG&E Corp. (PCG) to $64; Reiterates Neutral
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UBS maintained a Neutral rating on PG&E Corporation (NYSE: PCG), and cut the price target to $64.00 (from $67.00). UBS perceives the key challenge for now as tied to the Cost of Capital Case, which could see the cost of debt trued-up, a tailwind of ~$75 Mn or ~$0.10 in 2018.
Analyst Julien Dumoulin-Smith commented, "New slide deck format resembles EIX as it attempts to move back towards being a pure-play regulated utility. While accounting challenges remain, the core ratebase CAGR was increased to 6.5-7% up from 5.5-6.5% previously (mid-pt up by 0.75%), with the 2019 forecasted ratebase CAGR now near the top end of the previous range. Mgmt. is assuming true-up on GRC spend still (in 2018), albeit does not assume a shift in how GT&S expense vs. capex is recognized (upside possible). We note much of the improvement in the disclosed '19 ratebase comes from the GRC settlement which already guided to nearly ~$39 Bn (hence why the increase is not entirely a surprise)."
Shares of PG&E Corporation closed at $59.83 yesterday.
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