Barclays (NYSE:BCS) says it's maintining an "Equalweight" rating on FirstEnergy (NYSE:FE), citing WV merger recommendations as being not as constructive as hoped for.
Barclays said, "We prefer owning FE for its 5.7% dividend yield to Allegheny Energy (NYSE:AYE) ; (Equalweight rating) which we expect could go to $19/share on a deal break (12.3x our $1.55 in 2012). We view the WV recommendations as less than constructive as expected, but not insurmountable to merger approval. Regulated synergies are only 17% of the transaction post an equal sharing, but the Staff recommendation is more negative. Our forecasts show the deal to be accretive in 2013 at $3.19 versus $3.11 standalone."
FirstEnergy has also had problems keeping its gross margins at past levels, and have taken on more debt over the last several years, increasing their debt-to-equity ratio.
The energy company does have an ex dividend date on November 3, 2010.
They closed Friday at $38.93, gaining $0.28, or 0.72 percent. Barclays has a price target of $38 a share on them.
Showing posts with label Allegheny Energy. Show all posts
Showing posts with label Allegheny Energy. Show all posts
Monday, October 18, 2010
Thursday, October 14, 2010
Allegheny (NYSE:AYE), FirstEnergy (NYSE:FE) Merger Opposed by PA Lawmakers
Opposition to the merger of FirstEnergy Corp (NYSE:FE) Allegheny Energy, Inc. (NYSE:AYE) from Pennsylvania lawmakers, especially Gov. Ed Rendell, who has, without proof, asserted the deal would be a killer of jobs in the state.
That's after FirstEnergy said there will be no jobs lost because of layoffs. There could be transfer of some jobs or workers may retire, but losses wouldn't come from company actions.
"Pennsylvania Gov. Ed Rendell called on the Public Utility Commission to deny the merger request with Allegheny Energy (NYSE:AYE) (Equalweight rating). In a release, Gov Rendell said the proposed deal could kill 980 good-paying jobs in southwestern PA. Gov. Rendell also stated concerns around increasing consumer costs and the lack of positive environmental effects, energy efficiency incentives, or increases in renewable energy. FE and AYE committed to work through the regulatory process in a response. To secure approval in Pennsylvania, a merger is required to show benefits...AYE is 9% undervalued including the 6% deal arbitrage and the dividend yield, but we see downside to $19 in a break," said Barclays (NYSE:BCS).
The deal is an $8.5 billion acquisition offer for Allegheny Energy Inc by FirstEnergy.
Allegheny closed Wednesday at $24.55, gaining $0.35, or 1.45 percent. First Energy ended the session at $38.89, gaining $0.54, or 1.41 percent Barclays had a price target of $38 on FirstEnergy.
That's after FirstEnergy said there will be no jobs lost because of layoffs. There could be transfer of some jobs or workers may retire, but losses wouldn't come from company actions.
"Pennsylvania Gov. Ed Rendell called on the Public Utility Commission to deny the merger request with Allegheny Energy (NYSE:AYE) (Equalweight rating). In a release, Gov Rendell said the proposed deal could kill 980 good-paying jobs in southwestern PA. Gov. Rendell also stated concerns around increasing consumer costs and the lack of positive environmental effects, energy efficiency incentives, or increases in renewable energy. FE and AYE committed to work through the regulatory process in a response. To secure approval in Pennsylvania, a merger is required to show benefits...AYE is 9% undervalued including the 6% deal arbitrage and the dividend yield, but we see downside to $19 in a break," said Barclays (NYSE:BCS).
The deal is an $8.5 billion acquisition offer for Allegheny Energy Inc by FirstEnergy.
Allegheny closed Wednesday at $24.55, gaining $0.35, or 1.45 percent. First Energy ended the session at $38.89, gaining $0.54, or 1.41 percent Barclays had a price target of $38 on FirstEnergy.
Friday, September 24, 2010
Credit Suisse (NYSE:CS) Upgrades Allegheny (NYSE:AYE) and FirstEnergy (NYSE:FE), Downgrades Entergy (NYSE:ETR)
Credit Suisse (NYSE:CS) took aim at the energy sector, raising the rating of Allegheny Energy (NYSE:AYE) and FirstEnergy (NYSE:FE) while downgrading Entergy Corporation (NYSE:ETR).
Allegheny Energy and FirsEnergy were upgraded from "Neutral" to "Outperform," and Entergy Corporation was downgraded from "Outperform" to "Neutral."
Allegheny closed Thursday at $23.54, gaining $0.29, or 1.25 percent. Volume was up over 30 percent from the 3-month average.
FirstEnergy closed at $37.39, up $0.32, or 0.86 percent. Volume for them was also much higher than the daily average.
Entergy closed at $76.40, falling $0.65, or 0.84 percent. Trading volume increased for them as well.
Allegheny Energy and FirsEnergy were upgraded from "Neutral" to "Outperform," and Entergy Corporation was downgraded from "Outperform" to "Neutral."
Allegheny closed Thursday at $23.54, gaining $0.29, or 1.25 percent. Volume was up over 30 percent from the 3-month average.
FirstEnergy closed at $37.39, up $0.32, or 0.86 percent. Volume for them was also much higher than the daily average.
Entergy closed at $76.40, falling $0.65, or 0.84 percent. Trading volume increased for them as well.
Tuesday, September 21, 2010
Citigroup (NYSE:C) Says Comverge Likely (Nasdaq:COMV) Target
The recent announcement that Constellation Energy (NYSE:CEG) would be acquiring CPower has Citigroup (NYSE:C) thinking Comverge (Nasdaq:COMV) could very well become a takeover target.
Comverge has plummeted in value in just a couple short months, dropping at times almost 40 percent since the latter part of July.
The inability to control operating costs has been the major problem with Comverge, and if a company were to acquire them with the will and ability to cut costs, said Citigroup, they would probably be able to turn that around.
Possible suitors according to Citi are Progress Energy (NYSE:PGN), RRI (NYSE:RRI), Allegheny Energy (NYSE:AYE), Calpine (NYSE:CPN), or even Constellation Energy.
Citi maintains their "Hold" rating on Comverge, while dropping their price target from $13 to $8 a share. Comverge closed Monday at $6.90, gaining $0.30, or 4.55 percent.
Volume was almost four times the 3-month average of 153,639, ending the day at 605,402.
Comverge has plummeted in value in just a couple short months, dropping at times almost 40 percent since the latter part of July.
The inability to control operating costs has been the major problem with Comverge, and if a company were to acquire them with the will and ability to cut costs, said Citigroup, they would probably be able to turn that around.
Possible suitors according to Citi are Progress Energy (NYSE:PGN), RRI (NYSE:RRI), Allegheny Energy (NYSE:AYE), Calpine (NYSE:CPN), or even Constellation Energy.
Citi maintains their "Hold" rating on Comverge, while dropping their price target from $13 to $8 a share. Comverge closed Monday at $6.90, gaining $0.30, or 4.55 percent.
Volume was almost four times the 3-month average of 153,639, ending the day at 605,402.
Wednesday, September 15, 2010
FirstEnergy (NYSE:FE) Downgraded by Jefferies (NYSE:JEF) on Allegheny (NYSE:AYE) Merger
FirstEnergy (NYSE:FE) was downgraded by Jefferies Group (NYSE:JEF) from "Hold" to "Underperform," citing the upcoming merger with Allegheny Energy (NYSE:AYE), which they believe will dilute the company.
Jefferies said, "... a reduction in our earnings estimates and expected dilution from the proposed merger with AYE. The decrease in power and natural gas prices makes FE and AYE transaction dilutive in the first full year of combined operations."
Earnings per share for 2011 were cut from $3.85 to $3.50 and 2012 earnings per share from $3.00 to $2.80.
The price target on FirstEnergy was also drastically cut, lowering it from $38 to $31.
FirstEnergy closed Tuesday at $36.71, falling $0.63, or 1.69 percent.
Jefferies said, "... a reduction in our earnings estimates and expected dilution from the proposed merger with AYE. The decrease in power and natural gas prices makes FE and AYE transaction dilutive in the first full year of combined operations."
Earnings per share for 2011 were cut from $3.85 to $3.50 and 2012 earnings per share from $3.00 to $2.80.
The price target on FirstEnergy was also drastically cut, lowering it from $38 to $31.
FirstEnergy closed Tuesday at $36.71, falling $0.63, or 1.69 percent.
Friday, September 10, 2010
Citigroup (NYSE:C) Increases Price Target on Allegheny Energy (NYSE:AYE)
Citigroup Inc. (NYSE:C) announced it has increased its price target on Allegheny Energy, Inc. (NYSE:AYE) from $20 to $24. Citi said they maintain their "Hold" rating on the company.
The recent recommendation from four proxy advisory firms for the proposed merger of FirstEnergy Corp. (NYSE:FE) and Allegheny to go forward has given both companies a boost.
Both boards of the companies have given unanimous approval, and the deal is awaiting shareholder approval.
Terms are a stock-for-stock transaction valued at $4.7 billion, which would close in the first half of 2011.
The recent recommendation from four proxy advisory firms for the proposed merger of FirstEnergy Corp. (NYSE:FE) and Allegheny to go forward has given both companies a boost.
Both boards of the companies have given unanimous approval, and the deal is awaiting shareholder approval.
Terms are a stock-for-stock transaction valued at $4.7 billion, which would close in the first half of 2011.
Thursday, August 5, 2010
Allegheny Energy (NYSE:AYE) Downgraded by Barclays (NYSE:BCS)
Barclays (NYSE:BCS) downgraded Allegheny Energy (NYSE:AYE) from "Overweight" to "Equalweight, while increasing the price target from $23 to $24 a share.
"AYE stock is up 16% in the last month along with Power stocks and has been the best stock in our universe over that time period. The move reflected attention to the merger with FirstEnergy (NYSE: FE) (Equalweight) where the key milestones start happening in the next month, decision from PJM that the PATH transmission line ($1.4B) was necessary by mid-2015, and mean reversion," said an analyst from Barclays.
Estimates for earnings in the first quarter rose from $2.05 to $2.00, and for 2011, from $2.10 to $2.20, but for 2012 they were lowered from $1.80 to $1.69.
"AYE stock is up 16% in the last month along with Power stocks and has been the best stock in our universe over that time period. The move reflected attention to the merger with FirstEnergy (NYSE: FE) (Equalweight) where the key milestones start happening in the next month, decision from PJM that the PATH transmission line ($1.4B) was necessary by mid-2015, and mean reversion," said an analyst from Barclays.
Estimates for earnings in the first quarter rose from $2.05 to $2.00, and for 2011, from $2.10 to $2.20, but for 2012 they were lowered from $1.80 to $1.69.
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