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Top Analyst Upgrades & Downgrades (AAP, A, ALIM, CNP, CIM, CWTR, GT, K, LOW, M, NU, NST, CRM, FIRE)

Administrator — Tue, 15 Nov 2011 13:39:41 +0000

These are some of Tuesday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Advance Auto Parts Inc. (NYSE: AAP) Cut to Hold at Argus.
Agilent Technologies Inc. (NYSE: A) Raised to Buy at BofA/ML.
Alimera Sciences, Inc. (NASDAQ: ALIM) Cut to Neutral with $2 target at Credit Suisse.
CenterPoint Energy, Inc. (NYSE: CNP) Cut to Neutral at BofA/ML.
Chimera Investment Corporation (NYSE: CIM) Reiterated Outperform at Credit Suisse.
Coldwater Creek Inc. (NASDAQ: CWTR) Added to Strong Sell List at Zacks.
Goodyear Tire & Rubber Co. (NYSE: GT) named Bull of the Day at Zacks.
Kellogg Company (NYSE: K) Cut to Sell as Bear of the Day at Zacks.
Lowe’s Companies Inc. (NYSE: LOW) Raised target to $28 from $25 at Argus.
Macy’s Inc. (NYSE: M) named value stock of the day at Zacks.
Northeast Utilities (NYSE: NU) Raised to Buy at BofA/ML.
NSTAR (NYSE: NST) Raised to Buy at BofA/ML.
Salesforce.com Inc. (NYSE: CRM) Reiterated Neutral at Credit Suisse.
Sourcefire, Inc. (NASDAQ: FIRE) Initiated as Buy at BofA/ML.

JON C. OGG

Filed under: Analyst Calls Tagged: A, AAP, ALIM, CIM, CNP, CRM, CWTR, FIRE, GT, K, LOW, M, NST, NU

Utility M&A Wave Goes Into Overdrive (DUK, PGN, DYN, IEP, NU, NST, XLU, AEP)

Administrator — Mon, 10 Jan 2011 13:44:52 +0000

Another deal has been confirmed in the land grab for utilities. Duke Energy Corporation (NYSE: DUK) has confirmed fresh reports that it was acquiring Progress Energy Inc. (NYSE: PGN). Duke’s $23.5+ billion market cap compares to roughly $13.1 billion at Progress.

On Friday afternoon came federal approval for the pending FirstEnergy Corp. (NYSE: FE) and Allegheny Energy Inc. (NYSE: AYE) merger. The firms still have to go through state approvals to secure the merger. FirstEnergy’s $4.7 billion deal comes to paying $27.65 per share to Allegheny holders.

Progress is valued at $13.7 billion or $46.48 per share, but this is a stock-for-stock deal. Progress Energy holders will receive 2.6125 shares of common stock of Duke Energy per Progress share. Duke Energy will assume over $12 billion in Progress Energy net debt.

Duke Energy holders will own about 63% and Progress about 37% of the new company. Duke also expects to effect a reverse stock split before the merger and the exchange ratio will be adjusted.

Another pending deal in the world of utilities is Dynegy Inc. (NYSE: DYN), where Carl Icahn’s Icahn Enterprises, L.P. (NYSE: IEP) is in a deal to acquire the company if a go-shop provision does not generate a higher buyout price. Dynegy’s buyout is a tender offer that will follow with a formal merger that pays Dynegy shareholders $5.50 per share in cash.

There is also the pending Northeast Utilities (NYSE: NU) merger with NSTAR (NYSE: NST) announced back in October. The components inside the Utilities Select Sector SPDR (NYSE: XLU) appear to be getting fewer and fewer.

Duke shares are down 1.6% at $17.50 against a 52-week range of $15.47 to $18.60 with a 5.5% dividend yield; Progress shares are down 1.6% at $43.98 against a 52-week range of $37.04 to $45.61 with a near 5.5% dividend yield.

Duke and Progress highlighted the premiums here, but shareholders may want more leverage other than just larger scale.

American Electric Power Co., Inc. (NYSE: AEP) is so far not in the merger mania. It was recently voted as one of our top ten stocks to hold for the next decade.

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JON C. OGG

Filed under: Mergers and Buy Outs, Utilities Tagged: AEP, DUK, DYN, IEP, NST, NU, PGN, XLU

Utility Mergers Continue (NU, NST)

Administrator — Mon, 18 Oct 2010 12:05:58 +0000

More mergers in utility-land. Northeast Utilities (NYSE: NU) and NSTAR (NYSE: NST) have announced a $17.5 billion definitive merger in a move to create one of the largest utilities in the U.S with six regulated electric and gas utilities that will have nearly 3.5 million electric and gas customers.

Terms of the agreement call for NSTAR shareholders to receive 1.312 common shares of Northeast Utilities per NSTAR share that they own. The equity value of the merger comes to roughly $9.5 billion. If you tack on the debt assumptions in the deal then the enterprise value of the combined deal is roughly $17.5 billion.

Before the effects of the merger, Northeast Utilities had a market cap of about $5.4 billion and NSTAR had a market cap of roughly $4.1 billion.

NSTAR closed at $39.53 on Friday and the 52-week range is $30.76 to $40.23; Northeast Utilities closed at $30.70 and the 52-week range is $22.20 to $30.73. Unfortunately this is virtually a no-premium deal as NSTAR shares are valued at $40.21 based upon Friday’s close and before any share price adjustments based upon this merger.

JON C. OGG

Filed under: Mergers and Buy Outs, Utilities Tagged: NST, NU

Dividends or Not, Utilities Need To Perform (XLU, SO, D, DUK, FPL, AEP, ETR, FE, EIX, PGN, PPL, XEL, DTE, AES, CEG, NRG, CPN, AYE, NU, PNW, POM, NST, OGE, TE)

Administrator — Thu, 01 Apr 2010 14:54:34 +0000

Investors love dividends, and big stable utility stocks often have some of the highest dividends of any class of stocks. There has just been one problem… Dividends or not, utilities are sucking power and energy out of common stock portfolios of the American public. In fact, utilities have been among the worst of the worst when it comes to performance.

We wanted to take a look at Select Sector SPDR Trust (NYSE: XLU), Southern Company (NYSE: SO), Dominion Resources, Inc. (NYSE: D), Duke Energy Corporation (NYSE: DUK), FPL Group, Inc. (NYSE: FPL), American Electric Power Company (NYSE: AEP), Entergy Corporation (NYSE: ETR), FirstEnergy Corporation (NYSE: FE), Edison International (NYSE: EIX), Progress Energy Inc. (NYSE: PGN), PP&L Corporation (NYSE: PPL), Xcel Energy Inc. (NYSE: XEL), DTE Energy Company (NYSE: DTE) and more.

There may actually be some time for them to shine in the near future. Despite the rally market of the last month, almost none of these stocks are within 5% of their 52-week highs. We showed the dividend yields implied here, although as with all ‘yields’ there is often some distortion. What we did not show was a P/E ratio because of the lagging effect of that, but we did show was the closing price for March 31 as the quarter closed and compared that to the 52-week trading range and compared it to the average consensus price target from Wall Street analysts per Thomson Reuters.

So why is this sector in the spotlight? The dividend yields should be attractive enough. Most are 4% and higher. This offers defensive stock positioning, dividend yields, and the hope for some upside. Of course, some are barren of a dividend due to issues and turnarounds. That keeps investors from having to go out to REITs and take on all the risks there associated with land values and trends. Historically, utilities have been largely considered defensive stocks in hard times. Morningstar noted in its quarterly wrap-up, “Utility stocks were hurt in the quarter by falling commodity and energy prices, bearish earnings outlooks as firms reported earnings, and a generally negative view of the future of electricity demand.” The problem with that call is that energy demand is not dropping any longer and some larger companies are starting to increase their power usage again.

Filed under: Alternative Energy, Defensive Stocks, Dividend, Infrastructure, Nuclear, Oil & Gas, Shareholder Issues, Value Investing Tagged: AEP, AES, AYE, CEG, CPN, D, DTE, DUK, EIX, ETR, FE, FPL, NRG, NST, NU, OGE, PGN, PNW, POM, PPL, SO, TE, XEL, XLU

Natural Gas Price to Consumers Drops Off the Table (NST)

247wallst — Tue, 17 Mar 2009 14:54:00 +0000

Natural gas prices to some consumers in Massachusetts could fall 70% this summer. NSTAR (NYSE: NST) has filed a proposal with the Massachusetts public utilities regulator to reduce its summer rates from last summer’s $1.30/therm to a summer 2009 rate of $0.38/therm.

The continued decline of natural gas prices gets the credit for the price reduction. As with most natural gas suppliers, the cost of natural gas to NSTAR’s customers does not include a profit for the company. It is simply a pass-through cost. That’s why the rate proposal is having virtually no impact on the company’s share price today. Consumers will pay less for gas, but NSTAR’s profits will remain the same.

Paul Ausick
March 17, 2009

Posted in Oil & Gas Tagged: NST

Top Pre-Market Analyst Downgrades (ADBE, AGU, CMI, INTU, MOS, NST, PENN, CRM, SCG, SGP, SYMC, TEX, XRTX)

247wallst — Fri, 03 Oct 2008 06:38:27 +0000

These are the top analyst downgrade calls we are seeing this Friday morning with two hours to the open:

Adobe Systems (ADBE) Cut to Sell at UBS.
Agrium (AGU) Cut to Hold at Canaccord.
Cummins Inc. (CMI) Cut to Market Perform at Wachovia.
Intuit (INTU) Cut to Sell at UBS.
Mosaic (MOS) Cut to Hold at Canaccord.
Nstar (NST) Cut to Neutral at Merrill Lynch.
Penn National Gaming (PENN) Cut to Hold at Deutsche Bank.
Salesforce.com (CRM) Cut to Sell at UBS.
Scana (SCG) Cut to Underperform at Merrill Lynch.
Schering-Plough (SGP) Cut to Underperform at Merrill Lynch.
Symantec (SYMC) Cut to Neutral at UBS.
Terex Corp. (TEX) Cut to Market Perform at Wachovia.
Trimble Navigation (TRMB) Cut to Perform at Oppenheimer.
Xyratex (XRTX) Cut to Market Perform at FBR.

Jon C. Ogg
October 3, 2008

Posted in Analyst Calls Tagged: ADBE, AGU, CMI, CRM, INTU, MOS, NST, PENN, SCG, SGP, SYMC, TEX, XRTX

Top 10 Pre-Market Analyst Calls (ASMI, BWA, CCL, RCL, EMC, SSP, MWA, NSM, NST, SCG, WBMD)

247wallst — Wed, 18 Jun 2008 06:37:31 +0000

These are ten of the analyst calls we are focusing on early this Wednesday morning in pre-market trading:

ASM Intl NV (NASDAQ: ASMI) raised to Buy at Jefferies.
BorgWarner (NYSE: BWA) Raised to Overweight from Equalweight at Lehman.
Carnival (NYSE: CCL) and Royal Caribbean (RCL) were both Downgraded to Hold from Buy at ABN AMRO.
EMC Corp (NYSE: EMC) cut to Neutral at Bernstein.
EW Scripps (NYSE: SSP) raised to Outperform at Bear Stearns.
Mueller Water Products (NYSE: MWA) Raised to Outperform from Neutral at Baird.
National Semi (NYSE: NSM) raised to Buy at Deutsche Bank.
NStar (NYSE: NST) Cut to Sell from Neutral at Goldman Sachs.
Scana Corp. (NYSE: SCG) Cut to Sell from Neutral at Goldman Sachs.
WebMD Health (NASDAQ: WBMD) Cut to Sell from Neutral at Goldman Sachs.

Jon C. Ogg
June 18, 2008