UPDATE: Williams Capital Group Upgrades Black Hills to Buy, Raises PT

In a report published Wednesday, Williams Capital Group upgraded its rating on Black Hills Corporation

from Hold to Buy, and raised its price target from $34.00 to $40.00. Williams Capital noted, “Overall, we value the stock in a range of consolidated P/E valuations of 14.0x-15.0x, or almost $34.00 per share. While we believe that a P/E multiple in the 13.0x-15.0x range is appropriate on regulated 2013 earnings, comparable to current utility industry valuations, the de minimus level of likely EPS at the E&P segment over the next couple of years requires some discrete valuation of the company's oil and gas reserves as well. We ascribe nearly $325 million, or approximately $7.00 per share of value to Black Hills' E&P reserves in our sum-of-the parts valuation that we believe is fairly conservative, given the recent transaction. Therefore, given our expectations for the E&P segment, our valuation results in what appears to be an excessive P/E given current fundamentals and uncertainties. Nevertheless, we believe that our target price remains consistent with BKH's historical P/E valuation. We value the company's non-regulated businesses in a range of 9.0x-11.0x our 2013 EPS estimates.” Black Hills Corporation closed on Tuesday at $34.15.