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Few options seen for PG&E, so shares keep sliding

Jan. 16, 2019 3:21 PM ETPG&E Corporation (PCG) StockPCGBy: Carl Surran, SA News Editor46 Comments
  • Analysts say the continued slide in PG&E (PCG -2.2%) shares reflects growing concerns among investors that California's governor and lawmakers will not offer the company an alternative to bankruptcy in the near term, as rising public opposition to PG&E complicates the potential for a state rescue.
  • “Investors are starting to realize this is going to be quite a protracted process to figure out a solution that works for all constituents,” says Morgan Stanley analyst Stephen Byrd.
  • PG&E’s intent to file for bankruptcy protection and subsequent statements from California officials imply “that a rescue mission by elected leaders may not be forthcoming, forecasting a potentially contentious bankruptcy proceeding,” says Rob Rains of Washington Analysis LLC.
  • Wells Fargo's Neil Kalton downgrades PG&E to Market Perform from Outperform and cuts his price target to $10 from $15, predicting a “highly complex and lengthy” bankruptcy process.
  • A takeover by the state or local governments is among many possible outcomes for PG&E; possibilities also include selling off its gas business as well as its San Francisco headquarters - with so little commercial real estate space, PG&E's 1.7M sq. ft. HQ could be valued at more than $1B.
  • But Morningstar analyst Travis Miller reiterates his bullish view of the stock, saying PG&E shareholders will likely “retain post-bankruptcy equity value” that’s greater than the market is pricing in, adding that “if regulatory and legal outcomes happen as we think they will, buyers could see a substantial return on their investment today.”

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