Scotiabank Reiterates Sector Perform Rating on FirstEnergy Corp. (FE)

Scotiabank analyst Andrew Weisel reiterated a Sector Perform rating and $45.00 price target on FirstEnergy Corp. (NYSE: FE).

The analyst commented, "After meeting with management, we feel reassured that FE’s base outlook is attractive and that the bulk of the risks related to the bribery scandal are in the past. FE views its balance sheet, capex opportunities after years of under-investing, and resulting below-average customer rates as advantages as regulators are uniquely supportive of spending. Moreover, EPS/DPS growth should be above average at 6%-8% thanks to 9% rate base growth, improving earned ROEs, and minimal equity needs, mitigated by Parent debt refinancing and shrinking Signal Peak earnings. That said, we remain on the sidelines given two key risks. First, while we agree that the OH rate case is unlikely to be controversial, we worry that the overhang on the stock may persist for another year given investor apprehension and the slow process. Second, while capex-related equity needs are minimal, a cash outflow related to the securities litigation will likely be significant and cannot be quantified possibly for years. We like the risk/reward for investors with LT investment horizons but see better NT opportunities elsewhere."

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

Shares of FirstEnergy Corp. closed at $44.15 yesterday.

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