Argus Hikes PPL Corp Outlook, Says Business Focus Leads To Higher Multiple

• Shares of PPL Corp PPL appreciated 16.53 percent over the past six months, although they dipped almost to their 52 week low on September 9, at $29.41.
• Argus' Jim Kelleher has maintained a Buy rating on the company, while raising the price target from $35 to $40.
• The company recently completed the spinoff of its supply business with the intention of focusing on its regulated businesses. Kelleher believes that this would provide upside to the stock.

Analyst Jim Kelleher believes that "the regulated operations will support steady earnings and dividend growth, and that investors are likely to award the shares higher multiples as earnings become more predictable."

Kelleher mentioned that PPL Corp. has a robust capital expenditure plan, while its regulated rate base is expected to grow at a CAGR of 7 percent over the next five years.

"This rate base growth, coupled with a constructive rate recovery structure that reduces regulatory lag, should provide support for earnings growth of 6 percent through 2017 while also funding dividend payments," according to the Argus report.

Excluding the competitive supply business, the company reported its 3Q15 EPS at $0.51 for 3Q15, up from the 3Q14 levels and marginally beating the consensus.

The adjusted EPS estimates for 2015 and 2016 have been raised from $2.20 to $2.23 and from $2.28 to $2.35, respectively.