Janney Montgomery Scott Downgrades Middlesex Water Co. (MSEX) to Neutral

May 15, 2009 8:19 AM EDT

Janney Montgomery Scott downgrades Middlesex Water Co. (Nasdaq: MSEX) from Buy to Neutral. Price target lowered from $17 to $12.

Janney analyst says, "Declining customer usage, rising operating expenses, and another decrease in the company’s forecasted capital spending program signal that this historically recession resistant company is feeling the effect of current economic turmoil. While the company recently implemented temporary rate relief in Delaware, we do not believe this will mitigate the impact of declining customer usage. We lower our earnings estimates by 19% and 11% in 2009 and 2010, as we expect the operating headwinds experienced in the first quarter to continue for some time. Consequently, we lower our rating to NEUTRAL and decrease our fair value to $12. Upside to our forecast could stem from economic recovery, additional regulatory relief, or the addition of a sizable, accretive acquisition."

"We have lowered our 2009 and 2010 estimates to $0.72 and $0.64 from $0.89 and $0.92, for 2009 and 2010 respectively. We have assumed revenues decline 1% for the remainder of 2009 and operating expenses continue to rise 7-8%."

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