Brean Murray Upgrades Energy South (ENSI) to Buy

May 27, 2008 9:04 AM EDT

Brean Murray upgrades Energy South (NASDAQ: ENSI) to Buy with a $60 price target.

The firm said, "EnergySouth encompasses all the features of our 'optimal model' gas utility, with solid, rate-stabilized utility operations at its core. We favor gas utilities such as EnergySouth with highly stable bedrock utility operations buoyed by higher-return, non-regulated activities with physical assets. EnergySouth operates a stable gas utility in Alabama, a state with perhaps the most favorable regulatory environment in the nation. The company’s rates include provisions that allow it to periodically reset rates for usage, weather and other factors to earn a high 13.35-13.85% return on common equity. This compares very favorably to the average gas utility return of 10.0% nationally. For patient investors, we believe ENSI offers perhaps the most handsome total return potential over the next three to five years of any gas utility in our index."

EnergySouth engages in the purchase, distribution, sale, and transportation of natural gas in the United States.

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• Brean Murray Carret & Co.

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