Jefferies Boosts PT on FirstEnergy (FE) to $43; Raises Estimates on Increased Merger Savings

Jefferies is maintaining a Hold on FirstEnergy (NYSE: FE) but boosting its estimates and price target following first-quarter earnings from the company on Monday. Jefferies increased its price target 8.8 percent from $39.50 to $43.00.

Jefferies is increasing its FY11 EPS estimate by $0.10 to $3.30. The firm is also boosting FY12 by $0.50 to $3.20 and FY13 to $3.20. The move comes as FirstEnergy gave guidance of $3.20 - $3.50 on Monday following its earnings report.

Jefferies said, "Our updated estimates include FE’s updated increased merger savings (which are higher than the levels FE estimated when then merger was announced). The total impact of additional projected merger savings versus our old assumptions is around $0.30 in both 2012 and 2013, and some $0.13 in 2011. We do not think it will be difficult for the company to achieve utility and corporate savings, but we do see some risk in achieving projected unregulated savings."

The firm also believes, with respect to FirstEnergy's compliance with new EPA regulations, management is projecting potential capital investments of $2 - $3 billion, which may result in negative cash flow starting in FY13.

To see more analyst comments on FirstEnergy, click here. For a ratings history of FE, click here.

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