Jefferies Comments On Edison International Following Recent Earnings Announcement

Edison International EIX 1Q11 core EPS was $0.62 versus $0.82 in 1Q10, FC consensus of $0.63 and Jefferies estimate of $0.65. Jefferies is maintaining its 2011-2013 EPS estimates of $2.75, $2.35 and $2.60, respectively. The company reaffirmed its 2011 earnings guidance range of $2.60 to $2.90. The mid-point of the guidance assumes SCE earnings of $3.08, Energy Mission earnings of ($0.19) and a ($0.14) loss from the parent. Jefferies price target of $44.50 per share reflects SCE regulated business value based on 2012 13.9x T&D multiple and assumed normalized utility earnings of $3.40 and estimated $0.20 of loss at the holding company level. It does not assign any value to the merchant business. At current power and natural gas price levels, Jefferies does not see economic sense to invest new capital in the plants to add scrubbers and other environmental equipment, including trona. Based on yesterday's closing price for Edison of $39.25, this represents 12-month price depreciation and total return potential of 13.4% and 16.7%, respectively. Edison International closed Monday at $39.25