UPDATE: ISI Group Downgrades Exelon to Hold

ISI Group has published a research report on Exelon Corporation EXC and has downgraded the company from Buy to Hold and expects near-term downsides for the company. In the report, ISI Group writes, "Investors appear to be getting paid a 5% yield to wait for power & capacity market fundamentals to improve and for the benefits of the merger with CEG (closing in Q1 '12). However, weak near term power markets have pushed out the time horizon for the earnings trough at EXC from '12 to '13. While we expect the May '12 PJM capacity market auction to price higher (benefiting '15 EPS) current power market fundamentals point to negative earnings revisions and a negative near-term balance of risks for EXC shares. We see near term downside at $39/share. We have lowered our rating from Buy to Hold. The keys to EXC achieving our 12-month target price of $46 (down from $49.50) are the closing of the CEG merger, improvement in gas and power market fundamentals, and a positive outcome in the '12 PJM capacity auction." ISI Group has also lowered the price target from $49.50 to $46 on Exelon, which is currently trading down $0.42 from yesterday's $42.07 closing price.