Goldman Sachs Gives Update On Public Service Enterprise Group Following Recent Earnings Release

After 1Q2011 reporting, Goldman Sachs updates its 2011E-2014 EPS estimates for Pubic Service Enterprise Group PEG from $2.68/$2.44/$3.04/$3.03 to $2.74/$2.46/$2.95/$3.09. Goldman's revised forecasts reflect: 1Q2011 EPS results, slightly lower generation output assumptions, higher D&A and updated hedging levels for 2011-2013. Customer migration, low natural gas/power prices, and expiring above-market hedges will drive PSEG Power's EPS from $2.15 in 2010 to 2011/2012 levels of $1.94/$1.36. Goldman expects a recovery after 2012 given higher capacity prices in 2013+. PSE&G, the regulated business, should deliver steady growth and returns. Transmission growth, as well as renewable/efficiency spending in New Jersey, drive higher earnings over time, with minimal near-term rate case risk or exposure. Upside of $0.04-$0.05 exists if the state regulator approves higher investment levels. Goldman Sachs has a $33 PT and Neutral rating on PEG PEG closed Thursday at $32.05