Upside Possible Despite Limited Catalysts For Cleco In Near Term
Analysts at Goldman Sachs reiterate their "sell" rating on Cleco Corp (NYSE: CNL), while revising their estimates for the company. The target price for CNL has been raised from $25 to $26.
Despite limited catalysts for CNL, especially around the Evangeline unit in the near term, “upside to our LT estimates for CNL remains possible. Key drivers for potentially higher than expected earnings include: (1) if Cleco Power adds the smaller unit at Evangeline to the utility rate base, worth roughly $0.12 to EPS post 2012 or the entire facility, which would add $0.30 in EPS or (2) if Cleco Power earns above the midpoint of its RoE band, at closer to 11%- 11.25% versus the 10.7% midpoint - as every 25 bps adds $0.04 in EPS,” the analysts mention.
Goldman Sachs has raised its EPS estimates for 2010 and 2011 from $2.04 to $2.12 and from $2.13 to $2.16, while lowering its EPS estimate for 2012 from $2.16 to $2.14 to reflect: “(1) 1Q2010 earnings and 10-Q data, (2) slightly higher utility rate base and capital spending levels, (3) slightly lower expectations from the Evangeline merchant unit, and (4) updated financing requirements through 2012.”
