UPDATE: ISI Group Downgrades Exelon Corporation to Neutral, Raises PT Following Model Update

In a report published Monday, ISI Group analyst Greg Gordon downgraded the rating on Exelon Corporation

from Buy to Neutral, but raised the price target from $34.50 to $36.00. In the report, Gordon noted, “We have updated our model for Q1 results, updated hedging disclosures and current (5/1/13) forward curves. Our 13 / '14 /15 EPS estimates are now $2.40 / $2.30 / $2.45 vs. $2.40 / $2.25 / $2.40 previously. We have increased our target price to $36 from $34.50, reflecting higher 2015 PE multiples at the regulated utilities (14.6x vs. 13.2x previously), and modestly higher estimated '15 EPS (~$0.05) at ComEd. We are downgrading EXC from Buy to Neutral. Since we recommended EXC on 11/27/12 the stock is up 22% vs. 17.6% for its diversified utility peer group and 15.4% for the S&P500 (even after last week's 5.2% sell-off). While the stock appears fairly priced to current forward power curves, we note that EXC has significant exposure to rising power prices, and/or a recovery in competitive energy margins. All things equal, a $0.50/ mmbtu change in gas price would impact valuation by 9% while a 500 btu change in market heat rates impacts EXC's valuation by 12%/share. A $1/MWh change in realized competitive energy margin impacts valuation by 5%/share.” Exelon Corporation closed on Friday at $35.81.