SRE Warms Up On Underperformance
Analysts at Goldman Sachs reiterate their "buy" rating on Sempra Energy (NYSE: SRE), while reducing their estimates for the company. The target price for SRE has been raised from $51 to $52.
“We forecast the Commodities segment contributes minimal income in 2010 and roughly $0.55 of EPS long-term…We incrementally become more positive on Sempra given over 1,000 bps of underperformance versus the sector index, although we await a better entry point. According to the analysts key downside risks for SRE include: (1) delays in divesture of the commodities trading JV, and (2) rate case and regulatory risk, while higher than expected earnings at its commodity trading JV represents an upside risk," the analysts mention.
Goldman Sachs has lowered its EPS estimates for 2010, 2011 and 2012 from $3.90 to $3.72, from $4.72 to $4.63 and from $4.52 to $4.33, respectively on (1) 1Q2010 earnings and 10Q data, (2) revised capital expenditure and rate base estimates at the regulated subsidiaries, and (3) updated financing requirements.
