Eversource Energy (ES) PT Lowered to $63 at Scotiabank

Scotiabank analyst Andrew Weisel lowered the price target on Eversource Energy (NYSE: ES) to $63.00 (from $64.00) while maintaining a Sector Underperform rating.

The analyst commented: 'While we admit we’re surprised that CT regulators denied the sale of Aquarion to the Aquarion Water Authority (AWA), the unanimous rejection from PURA reinforces our view that CT remains an extremely challenging regulatory environment, possibly still the toughest in the country, contrary to management’s and bulls’ view that things have meaningfully improved since the reshuffling of commissioners last month. PURA found that the deal was not in the public interest, criticizing AWA (not ES’s fault, we acknowledge). We also note that, AWA is a quasi-public political subdivision of the state specifically created to acquire this asset. This negative outcome, if it holds, will have a meaningful negative impact to ES’s balance sheet as ES was expecting $1.6B of cash by year-end; we expect the company to need materially more equity in the absence of a sale, and see risk of credit rating downgrades. Separately, we also see MA showing signs that give us concerns, while ES remains exposed to offshore wind cost overruns. ES remains our least favorite regulated utility stock: despite the cheap valuation, we continue to believe that things can get worse before they get better. We lower our TP by $1, to $63."

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