HomeMy WebLinkAboutIDA research note 07-26-13.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.
July 30, 2013 IDA* – NYSE
Rating: Buy
Price: (7/29/13) $52.67
Price Targets: 12-18 month: $54.00
5-year: $65.00
Industry:
Utilities
Michael Bates
503.603.3045
mbates@dadco.com
Preview: Increased Expenses to Drive Tough Quarterly Comparison
IDACORP is scheduled to report 2Q’13 earnings on Thursday, August 1st before
the market opens. A conference all with management will be held the same day at
4:30 pm ET/1:30 pm PT.
Earnings estimates. We are forecasting 2Q EPS of $0.66, down from $0.71 last
year and below the Street mean of $0.68. On a full-year basis, we are modeling
EPS of $3.33, down from $3.37 in 2012, slightly above the $3.31 consensus and
near the top of management’s $3.20-$3.35 guidance.
We are forecasting gross margin of $191 million, flat with the prior year.
Similar to 2Q’12, results most likely benefitted from warmer-than-normal
temperatures and below-normal precipitation, driving higher electric usage by
irrigators. We expect these positive drivers to be offset by higher operating
expenses and lower AFUDC.
Weather. Warm summer weather got an early start this year in IDACORP’s
coverage territory. The region experienced far more cooling degree days than the
long-term average and slightly more than the warm Spring experienced last year.
BUY rated. Our $54 target equates to 15.9x our 2014 EPS estimate of $3.40.
D.A. Davidson & Co.
Two Centerpointe Drive, Suite 400 Lake Oswego, Oregon 97035 (503) 603-3000 (800) 755-7848 www.dadavidson.com
Copyright D.A. Davidson & Co., 2013. 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. Michael Bates, the
research analyst 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.
I, Michael Bates, attest that (i) all the views expressed in this research report accurately reflect my personal views about the common
stock of the subject company, and (ii) no part of my 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 6/30/2013) Buy Hold Sell
Corresponding Institutional Research Ratings Buy Neutral Underperform
and Distribution 51% 47% 2%
Distribution of companies from whom D.A. Davidson & Co. has received compensation for investment banking services in last 12 mos.
Institutional Coverage 9% 3% 0%
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 (503) 603-3000 (800) 755-7848 www.dadavidson.com
Copyright D.A. Davidson & Co., 2013. 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
Information contained herein has been obtained by sources we consider reliable, but is not guaranteed and we are not soliciting any
action based upon it. Any opinions expressed are based on our interpretation of data available to us at the time of the original
publication of the report. These opinions are subject to change at any time without notice. Investors must bear in mind that inherent in
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remember that past performance is not necessarily an indicator of future performance and D.A. Davidson & Co. makes no guarantee,
express or implied, as to future performance. Investors should note this report was prepared by D.A. Davidson & Co.’s Institutional
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