UPDATE: Wunderlich Initiates Coverage on Westar Energy on Fair Valuation
In a report published Thursday, Wunderlich Securities analyst Mike Bates initiated coverage on Westar Energy (NYSE: WR) with a Hold rating and $33.00 price target.
In the report, Wunderlich Securities noted, “We are initiating coverage of Westar Energy, Inc. (WR) with a Hold rating and a $33 price target. We expect average EPS growth of 5.7% over the next five years as the utility executes on its capital projects, which are largely focused on environmental upgrades and transmission development. WR trades near parity with comparable utilities based on regulated utility earnings, which exclude COLI. We believe a premium of 5% is justified, given the utility's highly visible growth prospects, relatively low regulatory risk, and attractive dividend yield. Our DCF model supports a fair value range of $31-$33, which is premised on a terminal EBITDA multiple of 9.0x and a WACC of 6.5%.”
Westar Energy closed on Wednesday at $30.75.
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