Entergy Corporation (ETR)

[eastunder]

Entergy Rises on Deutsche Upgrade

http://blogs.barrons.com/stockstowatchtoday/2013/06/10/entergy-rises-on-deutsche-upgrade/?mod=yahoobarrons


By Teresa Rivas

Entergy (ETR) was gaining more than 2% in recent trading, following an upgrade by Deutsche Bank.

The second-largest nuclear-fueled power provider in North America, Entergy has lagged the market in the past year, rising just 3.2%, compared to 25% for the S&P 500.

Today, analysts Jonathan Arnold and Caroline Bone upgraded the shares from Hold to Buy, to incorporate the value they see from the proposal for Entergy to separate and merge its electric transmission business into ITC Holdings (ITC), as well as higher capacity prices in New York and costs savings. However, they also note that while they see upside of up to $11 a share if the ITC deal (introduced in 2011) closes, Entergy should also sport “decent total return” at current levels on a standalone basis.

Arnold and Bone boosted their 2014 and 2015 standalone EPS estimates by 15 cents and 20 cents, respectively, to $5.30 and $5.05, given cost-saving measures and higher New York pricing. “Importantly, we see the potential for additional upside to these estimates should Federal Energy Regulatory Commission approve a new capacity zone (NCZ) for the Lower Hudson Valley (simulations have suggested pricing of ~$7/kWmonth in the NCZ and Entergy’s Indian Point facility would be a clear beneficiary).”

Their new price target is $74, up from a previous $66.