Deutsche Bank Eyes Ohio Resolution For American Electric Power

According to Deutsche Bank, American Electric Power AEP 2Q11 results missed expectations slightly, but management reaffirmed guidance for 2011 and 2012. Deutsche Bank said that it values AEP at $40.50 by applying an 11.9x P/E multiple to the 2013 EPS estimate of $3.40. “Our multiple reflects a 5% discount to our target regulated multiple, reflecting AEP's heavy reliance on coal generation and regulatory uncertainty. Downside risks include disallowance of capital spending, inability to recover environmental spending, and a slower economic recovery.” American Electric Power closed on Friday at $36.88.