Ameren Shares Downgraded To Hold At Argus

Shares of Ameren Corp AEE have climbed 15 percent year-to-date. Argus downgraded the rating for the company to Hold, citing valuation. The price target of $52 was removed.

Ameren is scheduled to report 1Q16 results on May 5. Argus has lowered its EPS estimate for 2016 from $2.75 to $2.60 to reflect management’s guidance and higher depreciation and amortization expense. The 5-year earnings growth estimate is 5 percent.

Share Movement

The Argus analyst pointed out that Ameren’s shares had gained 7 percent over the past 30 days, versus a 4 percent advance for the S&P 500. The shares had appreciated 19 percent over the past 52 weeks, versus a 1 percent decline for the index. The stock’s 5-year track record reflects a 79 percent gain, as compared to a 57 percent advance for the S&P 500.

“Despite the company’s expanding rate base and generally positive relations with regulators, we see an unexciting total return potential for AEE over the next 12 months,” the analyst commented.

Results

On February 19, Ameren had reported its 2015 non-GAAP adjusted earnings at $622 million, or $2.56 per share, up from the prior year’s $587 million, or $2.40 per share. Excluding results from discontinued operations, Ameren posted 4Q15 adjusted earnings of $30 million, or $0.12 per share, down from $46 million, or $0.19 per share, in 4Q14.

“The decrease reflected a higher effective income tax rate and lower retail electric and gas volumes, driven mainly by milder winter weather. These negative factors were partly offset by earnings on new electric transmission infrastructure and the absence of the nuclear refueling outage,” the Argus report mentioned.