UPDATE: ISI Group Downgrades FirstEnergy to Hold

ISI Group has published a research report on FirstEnergy FE and has downgraded the company from Buy to Hold due to near-term pressures on the stock after recent declines in power pricing. In the report, ISI Group writes, "FirstEnergy earnings expectations would be meaningfully diminished near term due to recent declines in power forward prices, which on a “mark-to-market basis” would put pressure on FE's earnings aspirations relative to their $3.20-$3.50/shr guidance for '11-'13. We still see the value proposition from EPS upside FE has to improvement in capacity prices in the next PJM auction (impacting revenues in '15). However current fundamentals point to negative earnings revisions and a negative near-term balance of risks for FE shares. We are therefore lowering our rating from Buy to Hold. Our 12-month target price of $47 (down from $52) assumes a recovery in gas and power prices in conjunction with a positive outcome in the May '12 PJM capacity auction." ISI Group has also lowered the price target from $52 to $47 on FirstEnergy, which is currently trading down $0.56 from yesterday's $42.81 closing price.