IDA022113.pdf

Please see page 4 for rating definitions, important disclosures
and required analyst certifications
All estimates/forecasts are as of 02/22/13 unless otherwise stated.
Wells Fargo Securities, LLC does and seeks to do business with companies
covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of the
report and investors should consider this report as only a single factor in
making their investment decision.

February 22, 2013

Equit Research
IDACORP, Inc.
IDA: Nudging Up EPS Estimates & Valuation Range

• Summary. IDA initiated 2013 EPS guidance of $3.20-3.35. We are increasing
our 2013-15E EPS to/from $3.27/$3.23, $3.40/$3.35, $3.40/$3.35, respectively.
We reiterate our Market Perform rating and raise our 12-18 month valuation
range to $48-50/share from $44-46/share primarily reflecting higher peer group
multiples.
• ’13 Guidance & EPS Outlook. IDA initiated 2013 EPS guidance of $3.20-3.35 and, favorably, expects to utilize less than $5mm of the ADITC balance in ‘13,
which indicates strength in the Idaho Power’s underlying earnings. Based on ’13
guidance, the company’s ’13-15 CapEx forecast (nearly $100mm higher than our
estimate) and other updates to our model, our revised 2013-2015 EPS estimates
are $3.27, $3.40 and $3.40, respectively. Importantly, our 2015 EPS estimate
assumes a return to traditional rate parameters in Idaho (use of average rate base
rather than year-end equity). That said, we think it is increasingly likely that
Idaho Power will be able to extend the ADITC rate plan beyond its 2014
expiration.
• Resource Update. We do not expect the 2013 Integrated Resource Plan (to be
filed in June) to indicate a need for new generation capacity as (1) the 2016E
capacity deficit is a manageable 84 MW and (2) there are ample demand response
solutions (400 MW) to bridge the gap between ’16 and the ’18 in-service date of
the Boardman-to-Hemingway (B2H) transmission line. That said, we think
additional resource needs could come back into play in a few years should sales
growth outpace the 1.1% load CAGR embedded in the ‘13 IRP and/or the B2H line
face additional delays.
• Economic Update. We were encouraged by management’s comments
regarding positive economic signals in late ‘12/early ‘13. Idaho’s seasonally-
adjusted unemployment rate ticked down to 6.6% in December, the lowest rate in
nearly four years, and economic development, such as construction projects and
business expansions, provide reason for optimism.
• Reiterate Market Perform. We were encouraged by IDA’s 2013 outlook
(more so the lack of expected ADITC usage than the range itself), 3-year CapEx
forecast (slightly above our model), and positive comments around economic
activity. Our Market Perform reflects valuation considerations as shares trade
roughly in-line with peers on underlying earnings power.
Valuation Range: $48.00 to $50.00 from $44.00 to $46.00
We value IDA under P/E multiple (14.5X multiple on our 15E EPS of $3.40),
dividend discount, and residual income analysis. Risks to our valuation include
project delays/cancellations, negative regulatory developments and economic
weakness.
Investment Thesis:
We are attracted to IDA's increasingly constructive regulatory environment, near-
term earnings visibility, healthy balance sheet, and attractive service territory. Our
Market Perform rating reflects valuation considerations.

Market Perform

Sector: Regulated Electric Utilities
Market Weight

Earnings Estimates Revised Up

2012A 2013E 2014E
EPS Curr. Prior Curr. Prior
Q1 (Mar.) $0.50 $0.53 NE
Q2 (June) 0.71 0.62 NE
Q3 (Sep.) 1.84 1.69 NE
Q4 (Dec.) 0.33 0.43 NE
FY $3.37 $3.27 3.23 $3.40 3.35
CY $3.37 $3.27 $3.40
FY P/E 13.9x 14.3x 13.7x
Rev.(MM)$1,080 $1,107 $1,118
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters NA = Not Available, NC = No Change, NE = No Estimate, NM = Not Meaningful V = Volatile, = Company is on the Priority Stock List

Ticker IDA
Price (02/21/2013) $46.73
52-Week Range: $38-48
Shares Outstanding: (MM) 50.2
Market Cap.: (MM) $2,345.9
S&P 500: 1,502.42
Avg. Daily Vol.: 191,008
Dividend/Yield: $1.52/3.3%
LT Debt: (MM) $1,466.6
LT Debt/Total Cap.: 43.5%
ROE: 10.0%
3-5 Yr. Est. Growth Rate: 4.0%
CY 2013 Est. P/E-to-Growth: 3.6x
Last Reporting Date: 02/21/2013
Before Open
Source: Company Data, Wells Fargo Securities, LLC estimates, and Reuters

Sarah Akers, CFA, Senior Analyst
[phone] /
[e-mail]
Neil Kalton, CFA, Senior Analyst(314) 875-2051 / [e-mail] Reeder, Associate Analyst
[phone] /
[e-mail]
Glen F. Pruitt, Associate Analyst
[phone] /
[e-mail]
WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

2

Company Description:
IDACORP (IDA) is the holding company for Idaho Power Company (IPC), a regulated electric utility serving
more than 500,000 customers in southern Idaho, including Boise and surrounding areas, and eastern Oregon.
In addition, IDACORP Financial Services (IFS), a non-utility business, invests in affordable housing tax
credits.

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s

WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

4

Required Disclosures

$27.00
$29.00
$31.00
$33.00
$35.00
$37.00
$39.00
$41.00
$43.00
$45.00
$47.00
$49.00
$51.00
$53.00
2/9
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1/1
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/
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/
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1
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/
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/
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/
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8
/
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/
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1
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0
/
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/
1
8
/
1
1
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/
1
5
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1
12
/
1
3
/
1
1
1/1
0
/
1
2
2/7
/
1
2
3/6
/
1
2
4/3
/
1
2
5/1
/
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2
5/2
9
/
1
2
6/2
6
/
1
2
7/2
4
/
1
2
8/2
1
/
1
2
9/1
8
/
1
2
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/
1
6
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ID AC OR P , Inc. (ID A) 3-yr. P rice P erform anceID AC OR P , Inc. (ID A) 3-yr. P rice P erform ance
Date
Date Publication Price ($) Rating Code Val. Rng. Low Val. Rng. High Close Price ($) 2/9/2010 Kalton
2/9/2010 NA 2 32.00 33.00 31.39
z 2/25/2010 33.94 2 35.00 36.00 33.89
z 8/6/2010 35.75 2 36.00 37.00 36.05
z 10/29/2010 37.00 2 38.00 39.00 36.80
cz 11/15/2010 36.34 1 40.00 41.00 36.52
z 2/9/2011 38.22 1 41.00 42.00 38.05
z 5/5/2011 38.91 1 42.00 43.00 38.91
z 7/19/2011 39.83 1 43.00 44.00 39.84
z 8/4/2011 36.47 1 41.00 42.00 36.47
dz 10/24/2011 40.51 2 42.00 43.00 40.43
z 11/4/2011 41.33 2 43.00 44.00 40.43
z 1/3/2012 42.41 2 44.00 45.00 41.80
„ 2/22/2012 Akers
c 4/27/2012 40.45 1 44.00 45.00 40.86 z 6/20/2012 41.00 1 45.00 46.00 41.00
z 8/3/2012 42.53 1 45.00 47.00 42.67
z 11/1/2012 44.80 1 47.00 49.00 44.80
z 11/16/2012 40.75 1 44.00 45.00 41.13 dz 1/2/2013 43.35 2 44.00 46.00 44.20
Source: W ells Fargo Securities, LLC estimates and Reuters data Symbol Key Rating Code Key
d Rating Downgrade ‹ Initiation, Resumption, Drop or Suspend 1 Outperform/Buy SR Suspended c Rating Upgrade „ Analyst Change 2 Market Perform/Hold NR Not Rated
z Valuation Range Change ˆ Split Adjustment 3 Underperform/Sell NE No Estimate
Additional Information Available Upon Request

I certify that:
1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or
issuers discussed; and
2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed
by me in this research report.

ƒ Wells Fargo Securities, LLC maintains a market in the common stock of IDACORP, Inc.
ƒ Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in
the next three months from IDACORP, Inc.
ƒ Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from IDACORP, Inc. in the
past 12 months.
ƒ Wells Fargo Securities, LLC and/or its affiliates, have beneficial ownership of 1% or more of any class of the common stock of
IDACORP, Inc.
ƒ IDACORP, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client
of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided investment banking services to IDACORP, Inc.
ƒ IDACORP, Inc. currently is, or during the 12-month period preceding the date of distribution of the research report was, a client
of Wells Fargo Securities, LLC. Wells Fargo Securities, LLC provided noninvestment banking securities-related services to
IDACORP, Inc.
WELLS FARGO SECURITIES, LLC
IDACORP, Inc. EQUITY RESEARCH DEPARTMENT

5

ƒ Wells Fargo Securities, LLC received compensation for products or services other than investment banking services from
IDACORP, Inc. in the past 12 months.
ƒ Wells Fargo Securities, LLC or its affiliates has a significant financial interest in IDACORP, Inc.
ƒ Wells Fargo Securities, LLC or its affiliates intends to seek or expects to receive compensation for investment banking services in
the next three months from an affiliate of IDACORP, Inc.
ƒ Wells Fargo Securities, LLC or its affiliates managed or co-managed a public offering of securities for an affiliate of IDACORP,
Inc. within the past 12 months.
ƒ Wells Fargo Securities, LLC or its affiliates received compensation for investment banking services from an affiliate of IDACORP,
Inc. in the past 12 months.

IDA: Risks to our valuation include project delays/cancellations, negative regulatory developments and economic weakness.

Wells Fargo Securities, LLC does not compensate its research analysts based on specific investment banking transactions.
Wells Fargo Securities, LLC’s research analysts receive compensation that is based upon and impacted by the overall profitability
and revenue of the firm, which includes, but is not limited to investment banking revenue.

STOCK RATING
1=Outperform: The stock appears attractively valued, and we believe the stock's total return will exceed that of the market over the
next 12 months. BUY
2=Market Perform: The stock appears appropriately valued, and we believe the stock's total return will be in line with the market
over the next 12 months. HOLD 3=Underperform: The stock appears overvalued, and we believe the stock's total return will be below the market over the next 12
months. SELL

SECTOR RATING
O=Overweight: Industry expected to outperform the relevant broad market benchmark over the next 12 months.
M=Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.
U=Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.

VOLATILITY RATING
V = A stock is defined as volatile if the stock price has fluctuated by +/-20% or greater in at least 8 of the past 24 months or if the
analyst expects significant volatility. All IPO stocks are automatically rated volatile within the first 24 months of trading.

As of: February 22, 2013
48% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Outperform.
Wells Fargo Securities, LLC has provided investment banking
services for 45% of its Equity Research Outperform-rated
companies.
50% of companies covered by Wells Fargo Securities, LLC
Equity Research are rated Market Perform.
Wells Fargo Securities, LLC has provided investment banking
services for 35% of its Equity Research Market Perform-rated
companies.
2% of companies covered by Wells Fargo Securities, LLC Equity Research are rated Underperform. Wells Fargo Securities, LLC has provided investment banking services for 14% of its Equity Research Underperform-rated
companies.

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WELLS FARGO SECURITIES, LLC
Utilities EQUITY RESEARCH DEPARTMENT

6

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Wells Fargo Securities, LLC.

SECURITIES: NOT FDIC-INSURED/NOT BANK-GUARANTEED/MAY LOSE VALUE