Tristan R. Brown
Tristan R. Brown
Tue, Mar. 29, 3:57 PM
- J.P. Morgan says premium multiples have made gas utility valuations relatively high, as the firm downgrades NiSource (NI +1%) to Neutral from Overweight with a $24 price target and reiterates Laclede Group (LG +2.5%) at Underweight.
- However, J.P. Morgan highlights Atmos Energy (ATO +2.3%) as a value opportunity, saying ATO is implementing an accelerated capital spending plan that has the potential to offer investors above average returns on investment.
- Based on five-year organic growth and no change in relative valuation, the firm foresees a respective best case total return of 8.5%, 7.9% and 6% for ATO, NI and LG, but views only ATO as offering relative and absolute value in a group multiple contraction scenario.
Fri, Mar. 18, 11:40 AM
- Morgan Stanley says gas utility valuations appear stretched, as the firm downgrades Atmos Energy (ATO -1.7%) to Equal Weight from Overweight and ONE Gas (OGS -2.8%) to Underweight from Equal Weight.
- "P/E, dividend yield, relative to electrics, relative to their own history - no matter how you slice it, gas utilities have gotten expensive (in part due to a significant uptick in M&A within the space)," the firm says.
- Stanley says ATO's growth outlook is one of the strongest and lowest risk across the regulated utility sector but the company’s shares now appear fairly valued, and OGS' shares have outperformed over the past 18 months and now trade at a double-digit premium relative to gas utility peers.
- The firm's respective stock price targets for ATO and OGS are $72 and $54.
Fri, Feb. 12, 5:40 PM
Feb. 8, 2012, 12:46 PM
Atmos Energy (ATO -2%) dips after its FQ1 comes up short of estimates. Net earnings fell 7.4% Y/Y on higher operating expenses and a 39% drop in gross profit from its non-regulated segment, but its regulated operation's revenue grew with the help of rate increases and regulatory enhancements.| Feb. 8, 2012, 12:46 PM