Saying the $4.17 billion bid by Northeast Utilities (NYSE:NU) for NSTAR (NYSE:NST) is dilutive, Wells Fargo (NYSE:WFC) downgraded Northeast from "Outperform" to "Market Perform."
Also downgrading the utility was UBS (NYSE:UBS), which dropped them from a "Buy" to "Neutral."
Wells said, "While we understand and appreciate the strategic rationale for the merger with NSTAR, the deal appears to dilute two of the underlying reasons for our positive rating (above average EPS growth and high concentration of FERC earnings). Until we gain greater clarity on some of the issues surrounding the proposed transaction, such as MA regulatory risk, we are moving to the sidelines on NU."
Northeast closed Monday at $30.42, losing $0.28, or 0.91 percent. Wells has a range on them from $32 to $33 a share.
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