Deutsche Bank Has Hold On Progress Energy (PGN)

Deutsche Bank has a Hold rating and is raising its price target to $47 on shares of Progress Energy PGN. In a note to clients, Deutsche Bank writes, "We are reducing our estimates, but raising our TP reflecting our recently increased Duke Energy (DUK target adjusted for the merger exchange ratio). With our PGN estimates now lower and DUK higher, we calculate that the companies will have to retain $225M+ of synergies to make the merger accretive in year one. While this looks achievable given $6B of combined O&M, timing and retention is now more important. PGN continues to offer a strong yield with the merger offering dividend growth, but we still see limited upside and reiterate our Hold rating." Deutsche Bank goes on to say, "We are raising our price target from $46 to $47, since we recently raised our DUK price target and we continue to value PGN as a function of the value we attribute to DUK given their planned merger. Downside risks include the failure to complete the merger with DUK, a weaker economy, negative rate case outcomes, and capital project delays. Upside risks include better-than-expected regulatory outcomes, lower costs, a faster economic recovery, and faster-than-anticipated capital deployment." Shares of PGN lost 22 cents on Friday to close at $45.70.