Wells Fargo: Increasingly Cautious On Electric Utilities - Downgrading NEE, PEG And SO To Market Perform
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Rating Summary:
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Today's Overall Ratings:
Up: 8 | Down: 12 | New: 1
Rating Summary:
20 Buy, 10 Hold, 1 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 8 | Down: 12 | New: 1
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Wells Fargo: Increasingly Cautious On Electric Utilities - Downgrading NEE, PEG And SO To Market Perform From Outperform
Wells analyst said, "After materially outperforming the broader market in 2011, we recommend an increasingly selective approach toward Electric Utilities in 2012. We are lowering our ratings on shares of NextEra (NYSE: NEE), Public Service Enterprise (NYSE: PEG) and Southern (NYSE: SO) to Market Perform from Outperform. In addition, we are lowering our longer-term EPS estimates for many of our Diversified Electrics in light of the recent material deterioration in forward power prices...The NEE and SO ratings changes largely reflect valuation considerations while the PEG rating change is reflective of our more cautious approach to power market leveraged names in light of the low natural gas price environment."
"The S&P Utilities materially outperformed the broader market in 2011 posting a 20% total return versus a 2% total return for the S&P 500. Heading into 2012, our more cautious stance primarily reflects valuation considerations for the Regulated Electrics. In contrast, for the Diversified Electrics we are concerned that the current valuations do not adequately reflect the recent deterioration in the fundamental outlook."
"Recommendations. Regulated Electric Outperform-rated names include ITC Holdings (NYSE: ITC), Northeast Utilities (NYSE: NU), NorthWestern Corp. (NYSE: NWE), NSTAR (NYSE: NST), OGE Energy (NYSE: OGE), PG&E Corp. (NYSE: PCG), SCANA (NYSE: SCG), Westar (NYSE: WR), Wisconsin Energy (NYSE: WEC) and Xcel Energy (NYSE: XEL). Our Outperform-rated
Diversified Electrics include American Electric Power (NYSE: AEP), Entergy (NYSE: ETR) and FirstEnergy (NYSE: FE)."
Wells analyst said, "After materially outperforming the broader market in 2011, we recommend an increasingly selective approach toward Electric Utilities in 2012. We are lowering our ratings on shares of NextEra (NYSE: NEE), Public Service Enterprise (NYSE: PEG) and Southern (NYSE: SO) to Market Perform from Outperform. In addition, we are lowering our longer-term EPS estimates for many of our Diversified Electrics in light of the recent material deterioration in forward power prices...The NEE and SO ratings changes largely reflect valuation considerations while the PEG rating change is reflective of our more cautious approach to power market leveraged names in light of the low natural gas price environment."
"The S&P Utilities materially outperformed the broader market in 2011 posting a 20% total return versus a 2% total return for the S&P 500. Heading into 2012, our more cautious stance primarily reflects valuation considerations for the Regulated Electrics. In contrast, for the Diversified Electrics we are concerned that the current valuations do not adequately reflect the recent deterioration in the fundamental outlook."
"Recommendations. Regulated Electric Outperform-rated names include ITC Holdings (NYSE: ITC), Northeast Utilities (NYSE: NU), NorthWestern Corp. (NYSE: NWE), NSTAR (NYSE: NST), OGE Energy (NYSE: OGE), PG&E Corp. (NYSE: PCG), SCANA (NYSE: SCG), Westar (NYSE: WR), Wisconsin Energy (NYSE: WEC) and Xcel Energy (NYSE: XEL). Our Outperform-rated
Diversified Electrics include American Electric Power (NYSE: AEP), Entergy (NYSE: ETR) and FirstEnergy (NYSE: FE)."
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