Deutsche Bank Downgrades Dynegy (DYN) to Sell
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Deutsche Bank downgraded Dynegy (NYSE: DYN) from Hold to Sell with a price target of $6.00 (from $8.00). Analyst Abe Azar pointed out another 25% drop in New England capacity prices.
"New England's FCM11 (2020/2021) capacity auction cleared at $5.30/kWMonth ($174/MW-day), down 25% from $7.03/kW-Month ($231/MW-day) last year. The result was below consensus and is the 2nd straight year with a 25% drop. Stagnating demand, increasing renewables and a multi-year rate lock that skews efficient price formation all continue to weigh. In 2020, exposed companies will see negative deltas of ~$20M (1%) on the low end for Buyrated PEG to over $100M (8%) for Dynegy, which we are cutting to Sell from Hold. With both power and capacity backwardated, DYN is running up the down escalator on its de-levering plans," said Azar.
Shares of Dynegy closed at $8.70 yesterday.
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