UPDATE: Bank of America Initiates Laclede Group at Buy Ahead of Missouri Gas Energy Purchase

In a report published Monday, Bank of America analyst Gabe Moreen initiated coverage on Laclede Group LG with a Buy rating and $51.00 price target.

In the report, Bank of America noted, “The Laclede Group, Inc. (LG) trades at an underserved discount to its peers, in our view, and we think it is poised to narrow this gap following the $975mn acquisition and eventual integration of the largest deal in its history: the pending purchase of gas utility property Missouri Gas Energy (MGE). We believe LG is attractively valued versus its peers (~15x our 2015E P/E versus group average of 16x) and expect the MGE acquisition to provide meaningful earnings per share (EPS) accretion post-integration in FY15. In addition, a nearly wholly regulated asset base argues for higher quality EPS versus peers and a relative re-rating. Our enthusiasm for LG is somewhat tempered by current gas utility sector valuations above historical averages where we have difficulty seeing significant multiple expansion for the sector overall.”

Laclede Group closed on Friday at $47.33.