UBS Trims Price Target as Calpine Corporation's (CPN) Management Claims Comfort with Debt Level
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Rating Summary:
8 Buy, 11 Hold, 0 Sell
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Today's Overall Ratings:
Up: 8 | Down: 5 | New: 36
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UBS maintained a Buy rating on Calpine Corporation (NYSE: CPN), and cut the price target to $17.00 (from $18.00), following the company's 4Q earnings report. Management commented that it is “incredibly comfortable” with the debt level and does not see reducing debt as a top priority. UBS sees these comments as the reasoning behind the company's sharp weakness in shares on Friday.
Analyst Julien Smith commented, "We attribute the sharp weakness in shares on Friday to management’s comments that indicate it is “incredibly comfortable” with the debt level (4.5x-5.5x) and does not see reducing debt as a top priority. The Net Debt / EBITDA is currently 5.7x ($1.9Bn UBSe 2016E adjusted EBITDA/ $10.7Bn YE15 net debt) but should decline to ~4.7x by YE16 based on disclosed debt paydown targets. While management stated that it sees its shares as cheap it did not repurchase any incremental shares since the 3Q call on 10/30; rather market repurchases of (unsecured) debt appears the most likely move."
For an analyst ratings summary and ratings history on Calpine Corporation click here. For more ratings news on Calpine Corporation click here.
Shares of Calpine Corporation closed at $12.35 yesterday.
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