DA Davidson Cuts Price Target on Westar Energy (WR), Rate Case Benefits Appear Smaller Than Expected
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Price: $27.79 +1.20%
Rating Summary:
8 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
8 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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DA Davidson is maintaining its Buy rating on shares of Westar Energy (NYSE: WR) and is lowering its price target slightly by $0.50 to $29.50.
The firm notes that the company's rate request is driven by the need to recover rising operating expenses, which would be partially offset by a proposed revision of its depreciation rates. They believe that the costs would provide additional protection to its net income.
DA Davidson also forecasts that earnings will growth will be slower than previously estimated in the near-term since "Westar’s request was based on an allowed ROE of 10.6%, which compares to 10.4% authorized in the previous case. The most recent rate order by regulators in Kansas was based on a 10.0% ROE, and our bias is to believe Westar’s outcome will be similar...coupled with the fact that Westar’s request to recover costs for the La Cygne environmental retrofit through a rider was recently denied."
The firm is reducing its 2011 and 2012 EPS estimates from $1.77 and $2.05 to $1.75 and $1.95. The estimate cuts are primarilay due to less than previously expected benefits from rate relief in mid-2012 and DA Davidsons new outlook on the La Cygne project.
For more ratings news on Westar Energy click here and for the rating history of Westar Energy click here.
Shares of Westar Energy closed at $26.36 yesterday.
The firm notes that the company's rate request is driven by the need to recover rising operating expenses, which would be partially offset by a proposed revision of its depreciation rates. They believe that the costs would provide additional protection to its net income.
DA Davidson also forecasts that earnings will growth will be slower than previously estimated in the near-term since "Westar’s request was based on an allowed ROE of 10.6%, which compares to 10.4% authorized in the previous case. The most recent rate order by regulators in Kansas was based on a 10.0% ROE, and our bias is to believe Westar’s outcome will be similar...coupled with the fact that Westar’s request to recover costs for the La Cygne environmental retrofit through a rider was recently denied."
The firm is reducing its 2011 and 2012 EPS estimates from $1.77 and $2.05 to $1.75 and $1.95. The estimate cuts are primarilay due to less than previously expected benefits from rate relief in mid-2012 and DA Davidsons new outlook on the La Cygne project.
For more ratings news on Westar Energy click here and for the rating history of Westar Energy click here.
Shares of Westar Energy closed at $26.36 yesterday.
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