Dahlman Rose Comments On Entergy Corporation Following Recent Purchase Agreement, Earnings Release

In conjunction with its earnings release and analyst day Friday, Entergy Corporation ETR announced an agreement to purchase two combined cycle natural gas plants from KGen Power Corp. The 450MW Hinds Energy facility in Mississippi will be purchased for $547/KW and be part of the Entergy Mississippi utility service territory. The 620MW Hot Spring facility in Arkansas will be purchased for $447/KW and be part of Entergy Arkansas. Both transactions are part of Entergy's request for proposal initiated in September 2009 and are expected to close in mid-2012. Entergy reiterated its previous 2011 earnings guidance of $6.35-6.85/share. First quarter adjusted EPS was $1.38, comparing to the $1.37 pre-released guidance April 19. Earnings were up $0.05 y/y due to strong results at the Utility segment, offset declines at Wholesale and Other. Despite Entergy's strong growth potential at its portfolio of regulated utilities, Dahlman remains cautious on the company's outlook going forward. Significant regulatory risk for the continued operation of both its New York nuclear reactors and the Vermont Yankee facility present significant headwinds at this time. Dahlman Rose has a Hold rating on ETR ETR closed Monday at $69.20