Deutsche Bank Comments On Northeast Utility Following Earnings Report; Maintains Hold Rating

Northeast Utility NU reported 13% growth in 2010 and looks set to deliver solid growth in 2011, with new guidance of $2.25-$2.40. The company remains on track to deliver its standalone growth rate of 6-9% and has expressed confidence in hitting the upper end of that range once merged with NST. While Deutsche Bank continues to view NU as a core utility holding with above-average long-term growth potential, Deutsche Bank does not see sufficient upside at current levels for a compelling entry point, particularly after Friday's 2% move. New guidance of $2.25-$2.40 surprised to the upside versus Deutsche Bank's $2.25E and consensus of $2.26. EPS growth of almost 8% at the midpoint will be driven in large part by improved distribution and generation results due largely to new rates implemented mid-year in 2010. The transmission business will see more modest growth of +3% YOY. Both distribution and transmission are expected to perform better than expected. Deutsche Bank has a $34 PT and Hold rating on NU NU closed Friday at $33.60