At $83 Per Share, Is This As Good As It Gets For Consolidated Edison?

The firm clarified that the stock has run up over 12 percent since last September, outperforming the utility index by 4 percent.

Con Ed Can Earn Its ROE

Analyst Anthony Crowdell noted that since his previous upgrade, Con Ed has entered into a settlement with intervenors for a three-year rate plan for its electric and gas business. The rate plan, the analyst said, is based on a 9-percent return on equity and up to a 50-percent equity ratio.

Jefferies thinks investors might view this return on equity as challenged, given that the national average is 9.7 percent. However, it pointed out that the NYPSC has since issues an 8.7-percent ROE for a New York gas utility.

"We are hopeful that ED management will be able to manage costs and earn their ROE especially since they will not be able to file until January 2019 for new rates in 2020," the firm added (check Anthony Crowdell's track record).

Aligning With Company's Equity Need Guidance

The firm said its 2017 equity needs estimate for the company is consistent with the company's guidance of $350 million. For 2018, the firm assumes $540 million of equity, although assuming no equity needs in 2019.

Lowering Estimates

Citing its updated forecast model, the firm lowered its estimates, premised mainly on the higher share count and greater parent losses compared to its previous forecast, which called for break-even at the parent.

Specifically, the firm lowered its 2018 earnings per share estimate by $0.10 to $4.20 and 2019 earnings per share estimate by $0.12 to $4.43. For 2020, the company expects earnings per share estimate of $4.62.

Downgrading Rating

As such, Jefferies downgraded shares of Con Ed to Hold from Buy and lowered its price target to $83.50 from $88.