UPDATE: Bank of America Downgrades Vectren on Valuation
In a report published Monday, Bank of America analyst Gabe Moreen downgraded Vectren (NYSE: VVC) from Neutral to Underperform, but raised the price target from $32.00 to $33.00.
In the report, Bank of America noted, “On 18 June 2013, VVC disposed of its ProLiance energy marketing assets, a positive, in our view, given the 61% stake generated losses during previous quarters. Investors may have seen this as a bullish signal, as VVC outperformed its peers since the announcement (8.5% vs. 3.9% for the S&P Utility Index). That said, we note VVC had been excluding ProLiance forecasts from earnings guidance, and the financial statement treatment of the transaction was well telegraphed, making us question why outperformance has been warranted. Furthermore, we view valuation as stretched given VVC trades at ~18x the 1-year forward rolling consensus EPS, essentially an all-time high valuation and we see little that could change VVC's currently moderate growth outlook.”
Vectren closed on Friday at $37.22.
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