Wedbush Downgrades EnergySolutions To Neutral
According to Wedbush, EnergySolutions (NYSE: ES) is downgraded to Neutral.
Wedbush said that it is downgrading to NEUTRAL from OUTPERFORM as catalysts underlying investment thesis have not played out and timing of core business recovery remains uncertain. “Our downgrade on shares of EnergySolutions is predicated on the following: (i) the shift in the operational strategy from being a Tier I to Tier I minority/Tier II player has not generated the contract award or financial results that we had originally anticipated; (ii) despite the extension of the Magnox contract, albeit a low-margin business, sustainable earnings power in the International segment (now part of Global Commercial Group) beyond 2014-2015 remains challenged; (iii) lower DOE spending, challenged budgets, and renewed concerns about the safety of nuclear energy has cast greater uncertainty on the outlook of the nuclear sector; (iv) although FY11 has been deemed to be a “base-building” year, FY12 growth is now likely muted; and (v) the risk-reward profile at current valuations is NEUTRAL given the lack of near-term catalysts. Accordingly, we believe shares of the company are likely to remain range-bound over the next 12 months until visibility improves or incremental catalysts emerge.”
EnergySolutions closed yesterday at $4.96.
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