Market Overview

$0 Or $40? PG&E Price Targets Reflect Uncertain Outlook On Wall Street

Share:
$0 Or $40? PG&E Price Targets Reflect Uncertain Outlook On Wall Street

PG&E Corporation (NYSE: PCG) shares were hammered Thursday after a bankruptcy judge ruled that PG&E will not have exclusive rights to propose a chapter 11 bankruptcy plan, opening the door for alternative plans from bondholders.

The ruling is a blow for common shareholders and means that there will be at least two options for navigating bankruptcy moving forward. PG&E’s plan focuses on using debt and equity financing to shield shareholders during bankruptcy. The bondholder plan involves using the majority of PG&E’s equity to pay off the company’s debts.

The stock traded lower by 28.31% to $7.88 per share in Thursday's afternoon market.

See Also: PG&E Plummets After Bankruptcy Judge Allows For Rival Chapter 11 Exit Plan

Analysts React

Morgan Stanley analyst Stephen Byrd said it’s difficult to recommend buying PG&E stock at this point given the extreme uncertainty and wide range of potential outcomes.

“Key near-term catalysts are mixed in our view and we still see a very wide range of potential values for the stock,” Byrd wrote in a note.

Morgan Stanley’s bear-case scenario target for PG&E is just $1, while its bull case target is $40.

Bank of America analyst Julien Dumoulin-Smith said the judge’s ruling puts pressure on PG&E to negotiate a deal with wildfire victims to gain their support in the process.

“The latest order brings incremental uncertainty and chaos to the process and is a clear negative,” Dumoulin-Smith wrote in a note.

He said the potential for competing bids creates significant risk for existing shareholders.

The ruling was bearish enough for Citi analyst Praful Mehtah to downgrade PG&E shares from Neutral to Sell, according to StreetInsider. Mehtah reportedly said the stock now has the potential to trade all the way down to $0 in the worst-case bankruptcy scenario.

Benzinga’s Take

Until there is a clear plan for bankruptcy, valuing PG&E common stock is a shot in the dark. Morgan Stanley’s bull case target of $40 and Citi’s bear case target pf $0 is indicative of just how uncertain PG&E’s outlook is at this point.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Latest Ratings for PCG

DateFirmActionFromTo
Oct 2019MaintainsNeutral
Oct 2019MaintainsEqual-Weight
Oct 2019MaintainsEqual-Weight

View More Analyst Ratings for PCG
View the Latest Analyst Ratings

Posted-In: Bank of AmericaAnalyst Color News Downgrades Price Target Legal Top Stories Analyst Ratings Best of Benzinga

 

Related Articles (PCG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
NVDACascendMaintains240.0
NXTCBank of AmericaReiterates89.0
RNRJP MorganAssumes173.0
CARBNorthlandDowngrades23.0
GLIBACitiUpgrades80.0
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 vipaccounts@benzinga.com

Online Trading Academy Innovates In Trading Education, Execution With CliK Technology

New Frontier Data Announces Plans To Acquire Civilized Worldwide