ETR: Quark Spreads Down Since February

Analysts at Citigroup downgrade Entergy Corp ETR from "buy" to "hold," while reducing their estimates for the company. The target price for ETR is set to $78. According to Citigroup, “Since our last target price change in February 2010, forward 2012 around-the-clock prices (a proxy we use for quark spreads) in the New England and the New York region, where most of Entergy’s nuclear plants are located, are down ~10%.... We calculate the value of the Vermont nuclear plant ~$4/share. We assume a 50% probability that the plant is shutdown in 1Q’12, due to the inability to receive a license extension.” The next events expected by the analysts are, “1) Entergy could begin negotiations for power purchase agreements (PPA) with two Vermont utilities. If the negotiations are successful, details for the PPAs could be received by year-end ’10, 2) Possible vote in the Vermont State Legislature (House and Senate) in early ’11 regarding the license extension for the Yankee plant.” “Entergy stated earlier in the year that it intends to return $5 billion of capital to shareholders in form of dividends and share-buybacks, over the next 5 years,” Citigroup adds. Citigroup has lowered its EPS estimates for 2010 and 2011 from $6.66 to $6.61 and from $7.30 to $7.10, respectively. More Analyst Ratings here