UPDATE: UBS Investment Research Lowers PT on Dynegy Following Lowered Estimates

In a report published Friday, UBS Investment Research analyst Julien Dumoulin-Smith reiterated a Sell rating on Dynegy DYN, but lowered the price target from $20.00 to $18.00.

In the report, UBS Investment Research noted, “We are lowering our ‘13/'14/'15 EBITDA estimates (pro forma assuming Ameren deal close) to $203/$293/$200 Mn from $274/$334/$249 Mn basis and unplanned outages issues drive '13 lower while commodity price declines since our last MTM (6/12) drive our ‘14/'15 lower. Partially offsets were increased IPH synergies ($70M from $50M previously) and California contract wins in ‘14/'15. With a $25M neg impact from ineffectiveness of hedges due to decreased correlation between Indy Hub and CoalCo busbars, the company closed hedges in the quarter (now 56% hedged for '13 vs. 68% as of 1Q) and will likely hedge less going forward where busbar sales and FTR sales are not available. With a lower hedge profile, mgmt will likely look to be a little more conservative given increased volatility of earnings (although lower collateral could be an offset).”

Dynegy closed on Thursday at $20.84.