UPDATE: Bank of America Merrill Lynch Raises PO on FirstEnergy to $47

Bank of America Merrill Lynch is out with its report today on FirstEnergy FE, raising its PO from $42 to $47. In a note to clients, Bank of America Merrill Lynch writes, "We are boosting our price objective to $47 from $42 to reflect the significantly higher earnings potential in 2014 stemming from the capacity auction. We use a sum-of-parts valuation, with the utilities valued at 12x 2014E earnings (in line with group averages) and 8x 2014E generation EBITDA. We reiterate our Neutral rating on the company. Downside risks are another downturn in commodity prices and failure to meet cost efficiency targets. Upside risks are a rebound in commodity and capacity prices and a stronger than expected economic rebound." Shares of FE closed Wednesday at $44.87, down 1.47% from Tuesday's close.