- AES Corp. (AES -4.6%) is downgraded to Sell from Neutral with an $11 price target at UBS, which says shares continue to outperform peers and trade at historic P/E highs not seen since late 2009.
- UBS notes that AES' Latin American underperformance is tied to concerns on pricing pressures from recent auctions in which renewables successfully undercut conventional resources; while AES Chilean contracts remain largely long-dated into the early 2020s, the firm says it is the first substantial indication of wider pressure from renewables on recontracting prices.
- With the Chilean subsidiary the source of much of AES' capacity expansion and EPS growth through this decade, UBS foresees risks to the company's backwardated cash flow, with free cash flow topping out in 2019.