Public Service Enterprise Group Estimates and Rating Boosted By Goldman Sachs

Public Service Enterprise Group Inc. PEG is an “under-appreciated New Jersey story,” Goldman Sachs’ Michael Lapides said in a report. He upgraded the rating on the company from Neutral to Buy, while raising the price target from $46 to $47.

Higher Growth At PSE&G

Public Service Enterprise Group’s regulated subsidiary [PSE&G] would likely surprise to the upside, analyst Lapides mentioned. He expects PSE&G to generate an EPS CAGR of 8 percent from 2015 to 2019, even after incorporating a 2017 rate case.

The estimated earnings growth is higher than what most regulated utilities generate; and is expected to be driven by “higher assumed investment in the electric/gas networks in NJ – we expect PEG to raise multi-year spend and rate base views in the coming months, likely at its 1Q2017 analyst day,” Lapides wrote.

PSEG Power

PSEG Power has a strong positioning and may achieve FCF growth. The analyst expects capital spending to begin moderating by 2018, boosting FCF at PSEG Power.

The EPS estimates for 2016, 2017, 2018 and 2019 have been raised from $2.82 to $2.83, from $2.89 to $2.98, from $2.93 to $3.07 and from $3.00 to $3.06, respectively, to reflect “upside to the company’s expected electric transmission and gas distribution regulated rate base/earnings growth, while also benefitting from retiring two largely un-economic coal plants at PSEG Power,” Lapides noted.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!