UBS Raised Price Target as Entergy (ETR) Shows Strong Performance Following a 4Q Earnings Call

UBS reiterated a Sell rating on Entergy Corp (NYSE: ETR), and raised the price target to $66.00 (from $62.00), following the company's 4Q earnings report. ETR reduced its 2016 adjusted UP&O EPS guidance to $4.20-$4.50 from “near the lower end” of $4.35-4.75. Entergy was a top performer on 2/17 following its 4Q15 earnings call.

Analyst Julien Smith commented, "Entergy was a top performer on 2/17 following its 4Q15 earnings call which we attribute primarily to the fact that the adjusted utility, parent, & other (UP&O) EPS ranges for 2017E and 2018E were maintained with investors largely looking past a lackluster outlook for 2016. Based on the midpoint of 2018E UP&O adjusted EPS guidance range ($4.90), Entergy is trading at 15.0x, a discount to peers at 15.5x implying that investors are slowly ascribing to the thesis that EWC has negative/negligible equity value alongside weaker earnings quality historically but we still see the utilities as overvalued. We believe the discount applied to the regulated business should be larger due to uncertainty around ability to earn ROEs in Arkansas and Texas plus risks around further reductions in sales growth expectations. For example, we can envision a realistic scenario where 2016E retail sales are ~$0.06/sh lower if the magnitude of expansion management targets does not materialize."

For an analyst ratings summary and ratings history on Entergy Corp click here. For more ratings news on Entergy Corp click here.

Shares of Entergy Corp closed at $72.98 yesterday.

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