Deutsche Bank Has Buy On CMS Energy (CMS)

Deutsche Bank has a Buy rating and a $20.50 price target on shares of CMS Energy CMS. In a note to clients, Deutsche Bank writes, "CMS reported earnings in line with expectations and just above guidance, continuing to build on a now-solid track record of delivering on EPS targets. We continue to expect CMS to grow EPS 5%-7% per year driven by rate base growth. In our view, the stock's weak performance yesterday resulted from questions over the underlying assumptions for 2011 based on some comments on the call. We believe this creates a buying opportunity given CMS' attractive relative valuation versus regulated peers and its above-average growth targets." Deutsche Bank goes on to say, "Our price target for CMS is $20.50. We value CMS by applying a 12.4 P/E multiple (a 3% premium to our target 12x regulated utility multiple) to our 2013 EPS estimate of $1.65. In our view, a slight premium is justified based on CMS' execution track record, above-average growth and Michigan's strong regulatory construct partially offset by the less favorable Michigan economy and CMS' relatively high parent debt load. Downside risks include disallowance of capital projects and any renewed economic deterioration." Shares of CMS lost 29 cents yesterday to close at $19.06, a loss of 1.5%.