Wunderlich Securities Comments On Great Plains Energy Following Earnings

Buy-rated Great Plains Energy GXP reported 4Q/full-year EPS on Friday. As anticipated, GXP did not issue formal 2011 EPS guidance, but did provide a list of 2011 drivers. Wunderlich's 2011E EPS remains $1.35 and reflects absence of strong weather and regulatory lag. Wunderlich is fine-tuning its 2012E EPS to $1.73 from $1.75. Its preliminary 2013 EPS is $1.83. Wunderlich Securities expects final rate orders in Missouri in April/May. GXP trades at 15% discount to peers. It continues to highlight the stock on the basis of both a significant near-term catalyst and exposure to longer-term growth through improving regulatory returns and economic recovery. The price target remains at $22 and continues to incorporate a modest discount to peers on 2012E EPS. GXP forecasts weather-normalized sales growth of +0.7% for this year, which is exactly in line with Wunderlich's assumptions. Industrial and commercial sales growth is projected to offset residential weakness. Updated 2011-2012 capex estimates came in $70 million below the conservative outlook, with 2013 looking about in line. Wunderlich closed Friday at $19.17