Market Overview

BofA Out Bearish On Avista, Says Guidance Appears Too Aggressive

BofA Out Bearish On Avista, Says Guidance Appears Too Aggressive

Energy company Avista Corp (NYSE: AVA) expects 9-10-percent annual EPS growth through 2022, which seems difficult to achieve given that it relies on substantial rate hikes, according to Bank of America Merrill Lynch.

The Analyst

Richard Ciciarelli initiated coverage of Avista with an Underperform rating and $43 price objective.

The Thesis

Avista’s EPS growth projections hold risks, as 4-6 percent of annualized bill inflation would be required to meet the targets, Ciciarelli said in a Thursday initiation note.

Not only is this bill inflation rate among the highest in the sector, but the timing of rate implementation in Washington could add to the challenge, given that new rates would not be effective until after the first quarter of 2020, the analyst said. 

“AVA will have to navigate through several regulatory dockets over the next few years, in jurisdictions where it has received less than favorable treatment in the past,” Ciciarelli said. Moreover, the company has faced challenges in operational execution in the past, he said. 

The premium to BofA’s 2021 EPS estimate of $2.18 implied by the company’s guidance is unwarranted in view of the current regulatory environment and limited upside to capital spending, the analyst said. 

The stock appears overvalued at current levels, given the substantial rate risk ahead, which could impede the company’s EPS growth trajectory, according to BofA. 

Price Action

Avista shares were down 0.31 percent at $42.36 at the time of publication Thursday. 

Related Links:

60 Biggest Movers From Yesterday

44 Stocks Moving In Thursday's Mid-Day Session

Latest Ratings for AVA

Jun 2019AssumesUnderweight
May 2019Initiates Coverage OnUnderperform
Nov 2016Initiates Coverage OnNeutral

View More Analyst Ratings for AVA
View the Latest Analyst Ratings

Posted-In: Bank of America Merrill Lynch energy Richard CiciarelliAnalyst Color Price Target Initiation Analyst Ratings Best of Benzinga


Related Articles (AVA)

View Comments and Join the Discussion!

Latest Ratings

View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at

The Economy, Amazon, JBHT, Freight Tech And Digital Brokers Drive The Conversation At Transparency19

Applied Optoelectronics Posts Q1 Earnings Miss: What Analysts Have To Say