UPDATE: Goldman Sachs Downgrades Cleco on Lower Estimates

In a report published Monday, Goldman Sachs analyst Michael Lapides downgraded the rating on Cleco CNL from Buy to Neutral, and lowered the price target from $48.00 to $45.00.

In the report, Goldman Sachs noted, “We lower our estimates and downgrade CNL to Neutral from Buy, as our new estimates now appear slightly below consensus forecasts, presenting risk in late 2013 or early 2014 when CNL offers guidance. Our new 2013/2014/2015 EPS estimates of $2.52/$2.67/$2.92 now incorporate (1) later-than-expected – but still in 2014 – revenue increases tied to the Coughlin plant being added to Cleco Power's rate base and (2) lower-than-previously-estimated share buyback assumptions in the 2014/2015 timeframe. Our new $45, 12-month P/E-based target price, which utilizes a premium relative to our baseline multiple used for Regulated Utilities, implies roughly 5% total return potential – near peer group levels. Since adding to the Buy list on October 22, CNL's shares are up 6.6% versus 12.7% for the S&P500 and (0.3%) for the sector index. Over 12 months the shares were 10.1% versus S&P500 20.1%. While CNL outperformed the XLU, shares underperformed the S&P 500 given sector-wide concerns of rising interest rates, premium valuations and challenging demand.”

Cleco closed on Friday at $43.97.