UBS Cuts Price Target on Calpine Corporation (CPN) Following 3Q Earnings and Conference Call
UBS maintained a Buy rating on Calpine Corporation (NYSE: CPN), and cut the price target to $19.00 (from $21.00), following the company's 3Q earnings result and conference call. Management remains quite bullish on the ERCOT market, with the MATS regulations set to take effect for many of the coal plants in the state next year.
Analyst Julien Smith commented, "With mgmt launching resilient 2016 EBITDA and FCF, as well as maintaining its longdated outlook, we see the story as poised to perform. We see this story as solidly above others into a weak gas tape expectation given likely acceleration of coal-to-gas switching. Further, with a potential minority sale of its interest in Russell City coming (~potentially down to 50% from 75%), we see asset divestment of contracts assets in CA as still a possibility (albeit modest at ~$50 Mn). Expect meaningful outperformance vs. peers into year-end, with ERCOT likely the focal point."
Shares of Calpine Corporation closed at $15.51 yesterday.