Jefferies Comments On Constellation Energy's 2011 Quarters

According to Jefferies, Constellation Energy CEG posted 2011 quarters. Jefferies reported that it is maintaining its 2011 EPS estimate of $3.25. “Our estimate is at the midpoint of the company's EPS guidance of $3.10–3.40. The company's guidance includes a $0.60 contribution from nuclear PPA, which is priced below market. We are maintaining our 2012 EPS estimate of $2.55. We are maintaining our 2013 EPS estimate of $3.05. Our price target of $37.50 is based on our sum of the parts analysis. For CEG's utility operations, we are using a P/E analysis, which, based on a 2012 average multiple of 13.0 times, results in a utility price target of $14.00. Using EV/EBITDA on Constellation's merchant businesses, we arrive at a $23.50 merchant price target based on a 5.0 multiple for the company's customer supply business and a generation multiple of 7 times (which represents a 33% discount to our IPP and merchant integrated group). Our EV calculation has been adjusted to include $1.0 billion of implied equity associated with the company's trading/hedging portfolio. Based on yesterday's closing price for Constellation of $33.12, this represents 12-month price appreciation and total return potential of 13.2% and 16.1%, respectively, including the dividend yield of 2.9%. Risks: Risks include liquidity and commodity risk.” Constellation Energy closed yesterday at $33.12.