D's Guidance for 2010 Aggressive
Brian Chin of Citi downgraded his rating on Dominion Resources Inc (NYSE: D) from "hold" to "sell," while reducing his estimates for the company. The target price has been reduced from $33 to $32.
Citi says that positive newsflow from D has pumped up market expectations. D had announced that it will sell its Marcellus gas reserve assets over the next 24 months and it has signed a VEPCO settlement. D's share price had appreciated on both these announcements, Citi mentioned.
Citi believes that D's guidance for 2010 is aggressive relative to forward commodities prices. According to Citi, the guidance is based on a gas curve range of $6.75-$7.25/mmbtu, which is significantly more than current forwards of $5.60/mmbtu.
Citi reduced the EPS estimates for 2010 and 2011 from $3.16 to $3.13 and from $3.34 to $3.11, respectively.
