CenterPoint Energy: An Attractive, Regulated Company

Jefferies finds CenterPoint Energy CNP to be fairly valued based on sum-of-the-parts P/E valuation. Based on Jefferies' analysis 2011 earnings potential is estimated for the electric company of ~$200 million following a rate decision by the Texas PUC, expected later this year. The estimate is based on our assumption for allowed regulatory earnings of $165-170 million and $30-35 million of below-the-line earnings. Key risks to the target price include egulatory and some commodity price risk at the natural gas segment. Jefferies has a Hold rating and a price target of $15.50 on CenterPoint Energy CNP closed Wednesday at $15.76