2011 IDA research note 09-16-11.pdf

Please refer to pages 2-3 of this report for detailed disclosure and certification information.
* D. A. Davidson & Co. makes a market in this security.
RESEARCH NOTE
Institutional Equity Research

IDACORP, INC.
September 19, 2011 IDA * – NYSE

Rating: Buy
Price: (9/16/11) $39.05
Price Targets: 12-18 month: $44.50
5-year: $50.00

Industry:
Utilities

James L. Bellessa, Jr., CFA
406.791.7230
[e-mail]

Michael Bates
Research Associate
406.791.7216
[e-mail]

Utility Will Post Expected Large Tax Benefit in 3Q’11

• Joint Committee approves tax benefit. This week the U.S. Congress Joint
Committee on Taxation approved IDACORP’s change to the uniform capitalization
method of accounting for its utility. The IRS is processing the tax change and the
company expects to post a ~$57 million tax refund for its previously unrecognized
tax benefit for its 2009 tax year. Additionally, the Joint Committee’s approval
allows the utility to increase the uniform capitalization tax deduction for 2010 and
2011, and the company plans to post another $3 million benefit during the
remainder of 2011 (most of which should be a 3Q’11 event). In total, these
benefits amount to ~$1.20 per share this year.
• Tax benefit will have other ramifications on 2011’s EPS. While we have been
expecting the sizeable tax benefit for some time, it has not been included in, and
will continue to be excluded from, our 2011 EPS estimate. Nonetheless, the tax
benefit will likely push up 2011’s ROE above the 10.5% level, requiring the
company to: 1) reverse $6.8 million of amortization of deferred investment tax
credits (ADITC) that were realized in 1H’11 premised on the company earning
less than a 9.5% ROE (allowed under a 2010 settlement agreement in Idaho); and
2) begin profit sharing with ratepayers as the utility will exceed the upper threshold
level at which it is required to share equally with ratepayers any profits in excess
of a 10.5% ROE.
• Maintaining estimates. Management plans to provide more clarification at the
time of its 3Q’11 EPS report. Accordingly, we are maintaining our 2011 and 2012
EPS estimates of $2.86 and $3.00, respectively; however, a possible $0.02-$0.05
per share benefit in 2012 from the usage of the uniform capitalization in future
years has not yet been factored into our estimate.
• Maintaining our 12-18 month price target and BUY rating. Near-term tax
issues appear likely to reduce the firm’s earnings predictability, but reported
results are likely to be strong in light of these developments. Accordingly, we are
maintaining our target price of $44.50, which equates to ~14.8x our unchanged
2012 EPS estimate. At the current share price, we continue to accord the stock of
IDA a BUY rating for total return investors.

D.A. Davidson & Co.
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Copyright D.A. Davidson & Co., 2011. All rights reserved.
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Required Disclosures
D.A. Davidson & Co. expects to receive, or intends to seek, compensation for investment banking services from this company in the
next three months.
D.A. Davidson & Co. is a full service investment firm that provides both brokerage and investment banking services. James L.
Bellessa, Jr., CFA and Michael Bates, the research analysts principally responsible for the preparation of this report, will receive
compensation that is based upon (among other factors) D.A. Davidson & Co.’s investment banking revenue. However, D.A. Davidson
& Co.’s analysts are not directly compensated for involvement in specific investment banking transactions.
We, James L. Bellessa, Jr., CFA and Michael Bates, attest that (i) all the views expressed in this research report accurately reflect our
personal views about the common stock of the subject company, and (ii) no part of our compensation was, is, or will be, directly or
indirectly, related to the specific recommendations or views expressed in this report.

Ratings Information

D.A. Davidson & Co. Institutional Research Ratings Buy Neutral Underperform
Risk adjusted return potential azbycx Over 15% total return
expected on a risk adjusted
basis over next 12-18 months
>0-15% return potential
on a risk adjusted basis
over next 12-18 months
Likely to remain flat or lose
value on a risk adjusted basis
over next 12-18 months
Distribution of Ratings (as of 6/30/11) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 56% 40% 4%
Corresponding Individual Investor Group Ratings Outperform Market Perform Underperform
and Distribution 62% 38% 0%
Distribution of Combined Ratings 56% 40% 4%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 4% 2% 10%
Individual Investor Group Coverage 0% 10% 0%
Distribution of Combined Investment Banking 4% 3% 10%

D.A. Davidson & Co.’s Institutional Research Rating Scale (maintained since 7/9/02): Buy, Neutral, Underperform
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 • Lake Oswego, Oregon 97035 • [phone] • [phone] • www.dadavidson.com
Copyright D.A. Davidson & Co., 2011. All rights reserved.
3
Target prices are our Institutional Research Department’s evaluation of price potential over the next 12-18 months and 5 years, based
upon our assessment of future earnings and cash flow, comparable company valuations, growth prospects and other financial criteria.
Certain risks may impede achievement of these price targets including, but not limited to, broader market and macroeconomic
fluctuations and unforeseen changes in the subject company’s fundamentals or business trends.

Other Disclosures

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