UPDATE: ISI Group Downgrades Entergy Corporation to Neutral, Lowers PT as Thesis is Not Panning Out as Anticipated

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

from Buy to Neutral, and lowered the price target from $70.00 to $64.00. In the report, ISI Group noted, “At EEI, ETR provided three valuable modeling parameters through '16. At their utilities , the company is guiding to an earnings CAGR of 5%-7% for '13-'16 off of an $819mm operating earnings base in '13. On the merchant side, the company provided an EBITDA forecast through '16 which shows EBITDA in ‘15/'16 trending to ~$450mm, a steep drop from ~$600mm in '14 despite HCM savings. Lastly, on Parent & Other expenses, ETR provided a range of ($1.05) – ($1.20), with the high end corresponding with higher preferred interest and lower tax offsets. Given these inputs, we are lowering our '14 / '15 EPS estimates to $5.10 / $5.00 from $5.15 / $5.30, respectively. Our revised '15 number now assumes a steep drop in merchant earnings as well as a higher assumed Parent & Other expense. Our utility earnings assume a 7% CAGR, which are only modestly lower as we are confident in that aspect of their story.” Entergy Corporation closed on Friday at $64.42.