Many commentators and analysts believe the deal by Northeast Utilities (NYSE:NU) to merge with Northeast SuperRegional Transmission Co (NYSE:NST) may do well over the long term, but short term is expected to drag the company down.
UBS (NYSE:UBS) was the latest to reveal what they thought as they downgraded Northeast from "Buy" to "Neutral."
"We are downgrading NU following this morning’s announcement that the CT company plans to merge with Boston-based NStar, not covered) in an MOE. Management expects 9-12 months for receipt of all regulatory approvals. Shareholders are expected to vote on the transaction in 1Q11 (two-thirds needed for approval). NST management will have key financial roles, while NU management retains key operational ones," said UBS.
The market ignored the downgrade, as Northeast continued its upward climb, which has been done incrementally since March 2009, when they were trading under $20 a share.
Northeast Utilities closed Tuesday at $30.79 a share, gaining $0.37,or 1.22 percent. UBS has a price target of $33 on them.
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