Wells Fargo Downgrades Public Service Enterprise Group (PEG) to Market Perform; Overall Cautious View

Wells Fargo downgraded Public Service Enterprise Group Inc. (NYSE: PEG) from Outperform to Market Perform, price target range $35-36 from $36-37.

Wells analyst says, "We wrestled with this downgrade and would recommend that investors view the move as more of a comment on our cautious view of the power markets in general – particularly natural gas-driven power markets - rather than on specific issues related to PEG. On the one hand, PEG shares still appear relatively cheap trading at 10-20% discounts to the Diversified Electric peer group on an EV/EBITDA basis (the EV/EBITDA comparison better reflects PEG’s comparatively strong balance sheet than P/E multiples). However, the 5-year EPS outlook is flattish – our 2011-15 EPS estimates are $2.75, $2.20, $2.45, $2.75 and $2.75 – and we view PEG’s exposure to a heavily gas-driven power market as relatively unappealing in the current environment."

For an analyst ratings summary and ratings history on Public Service Enterprise Group Inc. click here. For more ratings news on Public Service Enterprise Group Inc. click here.

Shares of Public Service Enterprise Group Inc. closed at $33.01 yesterday.

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