UBS Lifts PT on Entergy (ETR) to $76; Initiatives Start Gelling

UBS raises its price target on Entergy (NYSE: ETR) from $74 to $76 and maintains a Neutral rating on the stock.

Analyst Julien Dumoulin-Smith noted that the pieces are beginning to fall into place for Entergy, commenting, Mgmt continues to evolve the strategy around opportunities out of its rate regulated business in the southeast, emphasizing the ability to invest at a 4-5% clip predicated on 3.5-3.75% sales growth, the highest of any utility peer. While still only around the utility peer group, Street expectations remain quite modest. While Arkansas is likely to remain its most challenging state (and a key driver to meeting its 2016 regulated guidance CAGR of 5-7%), we see potential for earning at the top-end of the band/over-earnings in Louisiana (triggering sharing with customers) on back of robust sales (YTD of +2.4% has exceeded guidance of +1.9%).

We see upside to share expectations as oriented towards expanded deployment of capital around transmission interconnectivity to adjacent regions (MISO-North), as well as serving domestic load which appears back end loaded (accelerating capex budget). We suspect clarity around MISO's initial transmission procurement early next year could drive positive capex and EPS revisions as the strategy is fully developed. Further capex upside lies in finalizing of EPA compliance in AR for White Bluffs.

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

Entergy Corp closed at $74.47 yesterday.

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