Bank of America Maintains Buy, $43 Target on PG&E

Bank of America reiterates its Buy rating and $43 target price on PG&E

as it sees long term value despite downside risk reflected in the stock. BofA says, “The continued overhang on PCG remains the ongoing San Bruno risk, particularly the size of the fine and unresolved pipeline spend, and the broader CA cost of capital concerns. PCG is now trading at a 14% discount to the group, an above average 4.7% yield, and at the lowest multiple in 2014 among the regulateds. We assume a 10.5% ROE and $500M fine for SB in our 2014E of $3.42. Based on our analysis, at a 10.5% ROE, we believe the stock is discounting in more than a $2.5B fine, which we view as extremely unlikely.” PCG closed at $38.54 per share on Tuesday.