Bank Of America Downgrades TECO To Underperform

According to Bank of America, TECO Energy TE rating is downgraded to Underperform from Neutral. Bank of America said that it is downgrading its rating on TECO Energy to Underperform from Neutral due to valuation. “TE's earnings picture has benefited from strength in coal markets and the stock has reflected this. At current levels, the stock appears to be valuing the coal operation at 7x 2012 EBITDA, which is almost 20% higher than where other coal mining companies trade at this point. Put another way, TE trades at only a 1x discount to the regulated group on 2013 earnings despite the fact that about a third of TE's earnings come from the coal segment (up from 19% in 2010). That said, the core utility operations are solid and earn their allowed ROEs, though rate base growth opportunities appear modest in the near term.” TECO Energy closed yesterday at $19.27.