Wunderlich Securities Gives Color On Edison International Following Earnings; Raises PT

Edison International EIX reported 4Q operating results of $0.58 versus $0.59 a year ago. The weaker results were driven by lower unregulated results, higher costs, and higher consolidated taxes. Wunderlich is reducing its 2011 EPS estimate to $2.80, and its 2012E EPS to $2.60. Both years reflect lower realized power prices for the unregulated generation business. Wunderlich is increasing its target price from $37 to $39 but maintaining a Hold rating. Despite higher realized prices in 2010, EIX's unregulated generation operated at a lower capacity factor, negatively impacting results. As Wunderlich looks to 2011 to 2013, Midwest power prices remain at about $38, only rising above $40 in 2014. EIX has left its generation relatively unhedged for 2011 and 2012, anticipating some improvement in wholesale power prices. In 2011, the unregulated business will remain focused on power prices and the impact of looming environmental retrofit expenditures for EIX's Midwest coal fleet. Further, rail contracts for coal transportation for the Illinois assets expire at year end and the cost of any new contract is likely to be higher. The regulated business will be focused on completing the pending California rate case in 2011. EIX closed Monday at $39