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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

Top Analyst Upgrades & Downgrades (A, AMSG, BUD, AAPL, BBBY, GLW, CMRE, DAC, FTE, NU, PENN, CRM, SSW)

Administrator — Thu, 07 Apr 2011 12:17:43 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Thursday morning.

Agilent Technologies Inc. (NYSE: A) raised targets as Bull of the Day at Zacks.
AmSurg Corp. (NASDAQ: AMSG) Cut price/estimates as Bear of the Day at Zacks.
Anheuser-Busch InBev (NYSE: BUD) Reiterated Buy and $67 target at BofA/ML.
Apple Inc. (NASDAQ: AAPL) Reiterated Strong Buy and $430 target at S&P Equity Research (late yesterday call).
Bed Bath & Beyond Inc. (NASDAQ: BBBY) Reiterated Buy and raised target to $60 at Argus.
Corning Inc. (NYSE: GLW) Maintained Buy and $28 target at BofA/ML.
Costamare Inc. (NASDAQ: CMRE) Reiterated Buy and raised target to $21 at BofA/ML.
Danaos Corporation (NYSE: DAC) Maintained Underperform and $6.50 target at BofA/ML.
France Telecom (NYSE: FTE) Cut to Sell at RBS.
Northeast Utilities (NYSE: NU) Reiterated Buy and raised target to $41 at Argus.
Penn National Gaming Inc. (NASDAQ: PENN) Reiterated Outperform at Credit Suisse.
Salesforce.com (NYSE: CRM) Raised to Outperform at FBR.
Seaspan Corp. (NYSE: SSW) Cut to Underperform at BofA/ML.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Filed under: Analyst Calls Tagged: A, AAPL, AMSG, BBBY, BUD, CMRE, CRM, DAC, FTE, GLW, NU, PENN, SSW

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.

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

Carbon Emissions Take Record Drop In The US

247wallst — Thu, 06 May 2010 17:33:39 +0000

The US Energy Information Administration has just released its review of CO2 emissions in the US for 2009. That year’s report shows the largest ever absolute drop and percentage drop in CO2 emissions since the agency started keeping records in 1949. US CO2 emissions dropped by 405 million metric tons, or 7%, from 2008 to 2009. Total US CO2 emissions in 2009 are listed at 5.4 billion metric tons.

Since 2000, CO2 emissions have dropped by 445 million metric tons, and since 2007, the year with the highest emissions in the past decade, CO2 emissions have fallen by 585 million metric tons, almost 10%. There are two general reasons for the decline. One, fuel switching in electricity generation from coal to natural gas, and two, a recessionary economy where businesses use less energy and drivers log fewer miles.

The effects of fuel switching are measured by carbon intensity, which is the amount of CO2 emissions per unit of energy consumed, or CO2/BTU. The switch to natural gas reflects the lower price of natural gas compared with coal. Electricity generators such as Duke Energy Corp. (NYSE:DUK), American Electric Power Co. (NYSE:AEP), and the Southern Company (NYSE:SO) all use natural gas in their peaking plants and the few plants that still burn oil to deliver peak power are being converted to natural gas. Duke is also building a new intermediate natural gas-fired plant.

Electric power generation recorded the steepest fall in carbon intensity of any sector measured by the EIA. In 2009, carbon intensity in electric power fell 4.3% year-over-year due to fuel switching. Coal prices rose nearly 7% and natural gas prices fell by almost half. Because natural gas only emits about 55% as much CO2 as coal, burning natural gas significantly reduces overall CO2 emissions even when gas generates only a fairly small percentage of the nation’s electricity supply.

In 2000, natural gas was used to generate 518 billion kWh of electricity with CO2 emissions of 281 million metric tons. In 2009, the amount of electricity generated by natural gas rose to 841 billion kWh and CO2 emissions rose to 374 million metric tons. Those numbers represent a decrease in carbon intensity of 18%, avoiding emissions of 82 million metric tons of CO2.

Wind generation in the US jumped from 6 billion kWh in 2000 to 71 billion kWh in 2009. Because wind generation does not emit any CO2, the growth in wind energy over the 10-year period avoided emissions of 39 million metric tons.

Similarly, nuclear power generation grew by 45 billion kWh in the decade even though no new nuclear plants came on-line. Again, with no CO2 emissions directly attributable to nuclear generation, electricity from nukes avoided 26 million metric tons of CO2 emissions.

Consumption of transportation fuel has also fallen sharply in the past three years, by more than 1,000 b/d between 2007 and 2009. Fuel economy has also improved to an average 28.5 miles per gallon in 2009. Even lower fuel prices throughout most of 2009 did not boost demand for gasoline.

Demand in the industrial sector fell most of all from 2000 levels. Demand spiked in the computer and semiconductor industry in early 2008 and has fallen sharply since then. The primary metals industry, including steel makers like Nucor Corp. (NYSE:NU) also experienced a sharp drop beginning in 2008, primarily resulting from a drop in demand from auto makers. Since 2000, industrial output has fallen almost 34%, with virtually all the drop coming since mid-2008.

Unfortunately, the severe recession was chiefly responsible for the drop in energy use and CO2 emissions. That is not a good strategy, and not one that the US can build on to meet President Obama’s stated goal of reducing greenhouse gas emissions 17% below 2005 levels by 2020.

Because the economic recovery is expected to be fairly slow, especially after the effects of the stimulus bill get behind us at the end of the second quarter of 2010, these emissions numbers may not shoot back up as they might if the economy rocketed off again. It could be a good time to adopt new legislation on emissions and climate change. However, there will also be pressure to avoid imposing any new emissions regulations that could impede economic growth. The political fight has provoked only a few skirmishes so far, but pitched battles are looming.

The following chart from the EIA report shows the relationship between GDP and energy-related CO2 emissions for the past 20 years.

The gap has widened as the US economy has grown its service sector faster than its industrial and manufacturing. Ironically, manufacturing job growth is now actually helping the economic recovery in the US, though it’s unclear how long that will last or how much help it will ultimately be. Still, no politician will want to be accused of stomping on a recovery during an election year.

In the end, most people are likely echo St. Augustine: let’s halt CO2 emissions and climate change, just not yet.

Paul Ausick

Sponsor: 5 best investments for 2010 – The next nine months represent a bold new era for investors.

Filed under: Green Biz Tagged: AEP, DUK, NU, SO

Political Train Wreck: Opposition to Electricity Grid Plan Grows

247wallst — Mon, 03 May 2010 16:55:43 +0000

The American Clean Energy Leadership Act of 2009 included plans on how to pay for the cost of electricity transmission from projected wind farms in remote parts of the US to consumers who would benefit from the new sources of power. The Act proposes different methods of paying for the new grid capability, one of which is that costs are apportioned by benefits received. So, if a power company in New York wants to add wind generation from the Dakotas to its portfolio, that power company’s customers would pay more for the expanded grid than would residents of the Dakotas who would see less or no benefit from the upgraded grid.

Municipal utility districts from all parts of the US are lined up behind the idea that consumers who benefit are the ones who should pay more. Similarly, a group of investor-owned utilities (IOUs) including Southern Company (NYSE:SO), Alliant Energy Corp. (NYSE:LNT), CMS Energy Corp. (NYSE:CMS), Northeast Utilities (NYSE:NU), and seven others have issued statements and reports challenging both the plans for an upgraded grid and the proposed way of paying for the upgrade.

Here’s a map of the US electricity transmission grid.

The effort to work on an upgraded grid began with the Energy Policy Act of 2005 (EPAct). One of EPAct’s provisions directed the Federal Energy Regulatory Commission to designate energy transmission corridors that would move electricity generated in remote parts of the country to population centers. The effort petered out because it was widely disliked to begin with and would have been nearly impossible to implement in the West.

In the East, where distances are shorter, but land for transmission corridors is scarcer and much more expensive, politicians and Eastern utilities feared that wind and solar generation in the West and Midwest would cause them to miss out on the economic windfall that developing clean energy promised.

The immediate proposal under discussion involves building what is called an overlay grid of extra-high voltage lines that would, in effect, be an interstate highway system for transporting electricity from its point of generation to interconnections with local distribution grids and consumers. The plan calls for a network of 765,000 kV lines at a cost of some $100-$220 billion. Currently there are no such high-voltage lines in the US. A completely upgraded US electricity grid, including the extra-high voltage lines, could top $1 trillion.

The IOUs and their allies argue that transmission lines that merely pass through a state or region without feeding electricity to that area should not be paid for by consumers in that area. If this principle is adopted, it would have a chilling effect on the development of alternative energy-generation in the remote parts of the country where the wind blows most steadily and the sun shines most consistently. Because there aren’t enough consumers in that area to absorb all the additional planned generation, it is likely that alt energy projects would be scaled back.

The IOUs also have an ulterior motive. If alternative power sources are subsidized by everyone, it threatens what is essentially a captive market for the coal-, gas-, and nuclear-fired plants these companies have either built or have on the drawing boards. The IOUs argue that subsidized transmission distorts the price signals that are inherent in rates.

In a letter to Senators Harry Reid and Mitch McConnell, a group of utility districts argue, “Transmission planning and cost allocation must support price transparency and the access to accurate cost and price information so that the power purchasers can make informed resource purchase decisions and consumers do not end up paying more than necessary.” The letter goes on, “If developers and potential customers of the new resources don’t have to pay the costs of transmission associated with their decisions, the price signal is lost and distant resources will have an unwarranted price advantage over local, less costly ways of getting to the cleaner energy future we all desire.”

The utility districts, like the IOUs, have an ulterior motive. If clean energy can be supplied at a competitive cost, the utility districts are likely to face competition they have not had to deal with in the past.

The battle is already being waged in California, where a June ballot initiative would require that residents approve by a two-thirds majority any attempt by a public agency to enter the retail power business. The initiative, Proposition 16, responds to a law passed in California in 2002 that allows the establishment of a community choice aggregation program that could get public funding to enter the retail power market.

The sole sponsor of Proposition 16 is PG&E Corp. (NYSE:PCG), which has spent more than $30 million so far in support of Prop 16. If the proposition is approved, it will be virtually impossible for a local government to purchase electricity from a non-PG&E source.

The argument for spreading the cost of grid upgrades around to all consumers is also laced with special interests. Sunny states like Nevada and Arizona, and windy states like the Dakotas could generate enough electricity to power the US essentially forever. Politicians from those states know, however, that without a way to get that power to market, development will never happen.

Development means jobs and wealth and re-election, exactly what the Eastern politicians feared. A new wrinkle has developed, though, that might change the debate slightly. When Interior Secretary Ken Salazar last week approved the Cape Wind Project offshore of Massachusetts, the door was opened to similar development off the Atlantic coast. If that should happen, the wealth would get spread around more, and opposition from East coast politicians and utilities could subside.

That still leaves the IOUs and many utility districts opposed to spreading out the costs, but that issue could be addressed in a variety of ways that would satisfy everyone. That’s what politics is for, after all.

The pressing need in the US for a robust, modern grid that can reliably get electricity to where it’s needed does not admit an easy or cheap solution. The solution will cost billions of dollars and take years to build. Government policy, and money, have been driving what little has been done so far. But the most fundamental question is the one now being asked: do we let government policy drive development or is listening to the market both fairer and more likely to lead to the desired result?

Paul Ausick

Filed under: Alternative Energy Tagged: CMS, LNT, NU, PCG, SO

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

Top Analyst Downgrades (AEG, ASTI, AVR, NU, RDS-A)

247wallst — Wed, 18 Mar 2009 12:45:25 +0000

These are the top analyst downgrades and negative research calls we have seen on Wall Street this Wednesday morning:

Aegon (AEG) Cut to Sell at UBS.
Ascent Solar (ASTI) Cut to Sell at Cantor Fitzgerald.
Aventine Renewable (AVR) Cut to Underperform at Credit Suisse.
Northeast Utilities (NU) Cut to Hold at Jefferies.
Royal Dutch Shell (RDS-A) Cut to Hold at Citigroup.

JON C. OGG

Posted in Analyst Calls Tagged: AEG, ASTI, AVR, NU, RDS-A

Top 10 Pre-Market Analyst Calls (MT, DISCA, FNSR, GILD, GMXR, JDSU, LLTC, NU, UEIC, WMB)

247wallst — Fri, 22 Feb 2008 07:18:08 +0000

These are some of the research calls we are looking at this morning that are impacting shares in early pre-market trading:

Arcelor Mittal (NYSE: MT) raised to Buy at Deutsche Bank.
Discovery Holding (NASDAQ: DISCA) raised to Neutral at Credit Suisse.
Finisar (NASDAQ: FNSR) started as Outperform at Morgan Keegan.
Gilead Sciences (NASDAQ: GILD) downgraded to Market Perform from outperform at Bernstein Research.
GMX Resources (NASDAQ: GMXR) started as Buy at Jefferies.
JDS Uniphase (NASDAQ: JDSU) started as Market Perform at Morgan Keegan.
Linear Tech (NASDAQ: LLTC) raised to Buy from hold at UBS.
Northeast Utilities (NYSE: NU) raised to Buy from hold at UBS.
Universal Electronics (NASDAQ: UEIC) downgraded to Hold from Buy at Deutsche Bank.
Williams Companies (NYSE: WMB) raised to Outperform at RBC Capital Markets.

Jon C. Ogg
February 22, 2008