KeyBanc-Nov-20-2012.pdf

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November 20, 2012
ENERGY: Electric Utilities / Multi-Utilities
Industry Update / Estimates Change
KeyBanc
Capital￿Markets

Utilities: Post-3Q12 Earnings Estimate Changes
KeyBanc Capital Markets Inc.
Member NYSE/FINRA/SIPC
Paul T. Ridzon: [phone] Ð [e-mail]
Timothy Yee: [phone] Ð [e-mail]
ACTION STATEMENT
Following the 3Q12 electric utility industry earnings reporting season and after attending the EEI industry conference, we are adjusting
annual earnings estimates for several companies in our coverage list.
KEY INVESTMENT POINTS
We are adjusting earnings estimates for several of our names under coverage following 3Q12 electric utility industry earnings reports
and the EEI industry conference. Our updated estimates are as follows:
ANNUAL ESTIMATE CHANGES
Increases
Entergy Corporation (ETR-NYSE; HOLD) ± We are raising our 2012 EPS estimate to $5.55 from $5.45 on year-to-date results,
net revenues from rate actions and lower parent income tax expense.
Exelon Corporation (EXC-NYSE; HOLD) ± We are raising our 2012 EPS estimate to $2.85 from $2.75 on year-to-date results
and revenue impact from the October 3 Illinois Commerce Commission©s (ICC) rehearing decision to adopt the Company©s position on
return on pension assets in its formula rate mechanism for grid modernization.
IDACORP, Inc. (IDA-NYSE; BUY; $46.00 price target) ± We are raising our 2012 EPS estimate to $3.35 from $3.30 after solid
3Q and year-to-date results, aided by favorable weather and higher rates from seasonal rate design and Langley Gulch power plant
in service. We are also raising our 2013 EPS estimate to $3.25 from $3.20 to capture the benefit of strong 2012 results on the
book equity of Idaho Power. Under an Idaho settlement, Idaho Power effectively has downside earnings protection to a 9.5% return
on this year-end book equity.
Decreases
Ameren Corporation (AEE-NYSE; HOLD) ± We are reducing our 2012 EPS estimate to $2.40 from $2.50 after ICC ratemaking
adjustments to Ameren Illinois electric delivery formula rates and its impact on year-to-date results.
Duke Energy Corporation (DUK-NYSE; HOLD) ± We are reducing our 2013 EPS estimate to $4.35 from $4.50 for lower PJM
capacity revenues and non-regulated Midwest Generation energy margins, higher O&M costs and sluggish economy at the regulated
utilities.
Entergy Corporation (ETR-NYSE; HOLD) ± We are reducing our 2013 EPS estimate to $5.20 from $5.30 on increased non-fuel
O&M expenses and continued low commodity pricing environment impacting merchant EWC segment results.
MDU Resources, Inc. (MDU-NYSE; BUY; $24.00 price target) ± We are reducing our 2012 EPS estimate to $1.15 from $1.20,
driven by the E&P segment experiencing low commodity pricing and modest drilling delays in new oil production. Subsequently, we
are also reducing our 2013 EPS estimate to $1.35 from $1.40.
TECO Energy, Inc. (TE-NYSE; HOLD) ± We are reducing our 2013 EPS estimate to $1.10 from $1.20 due to our initial view of
expected lower coal segment volumes and pricing in 2013, as well as higher costs at Tampa Electric. We expect greater visibility into
2013 earnings after TE completes met coal contract negotiations into early next year.
FOR IMPORTANT DISCLOSURES AND CERTIFICATIONS, PLEASE REFER TO PAGE 4 OF THIS NOTE.
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2013 VALUATION TABLE FOR COMPANIES WITH CHANGED ANNUAL ESTIMATES
Company TKR Rating
2012E
EPS
2013E
EPS
2013
P/E
Price Tgt
P/E
Price
Target
Ameren Corp.AEE Hold $2.40 $1.95 14.9x N/A N/A
Duke Energy Corp.DUK Hold $4.25 $4.35 14.0x N/A N/A
Entergy Corp.ETR Hold $5.55 $5.20 12.0x N/A N/A
Exelon Corp.EXC Hold $2.85 $2.60 11.2x N/A N/A
IDACORP, Inc.IDA Buy $3.35 $3.25 12.7x 14.2x $46.00
MDU Resources Group, Inc.MDU Buy $1.15 $1.35 14.8x 17.8x $24.00
TECO Energy, Inc.TE Hold $1.15 $1.10 14.9x N/A N/A
14.1xKBCM Utility Peer Group Average Multiple =
Source: KeyBanc Capital Markets Inc. estimates
Company NoteNovember 20, 2012
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Cur Prv Cur Prv FC FC Current EPS Previous EPS
Sym Rtg Rtg Target Target 2012 2013 2011 2012 2013 2011 2012 2013
AEE HOLD HOLD NA NA $2.44 $1.98 $2.56 $2.40 $1.95 $2.56 $2.50 $1.95
DUK HOLD HOLD NA NA $4.28 $4.41 $4.38 $4.25 $4.35 $4.38 $4.25 $4.50
ETR HOLD HOLD NA NA $5.53 $5.10 $7.62 $5.55 $5.20 $7.62 $5.45 $5.30
EXC HOLD HOLD NA NA $2.85 $2.56 $4.16 $2.85 $2.60 $4.16 $2.75 $2.60
IDA BUY BUY $46.00 $46.00 $3.34 $3.25 $3.36 $3.35 $3.25 $3.36 $3.30 $3.20
MDU BUY BUY $24.00 $24.00 $1.16 $1.36 $1.19 $1.15 $1.35 $1.19 $1.20 $1.40
TE HOLD HOLD NA NA $1.18 $1.15 $1.27 $1.15 $1.10 $1.27 $1.15 $1.20
Company NoteNovember 20, 2012
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KeyBanc Capital Markets Inc. Disclosures and Certifications
Important disclosures for the companies mentioned in this report can be found at https://key2.bluematrix.com/sellside/
Disclosures.action.
Please refer to the analysts© recently published reports for company-specific valuation and risks.
Reg A/C Certification
The research analyst(s) responsible for the preparation of this research report certifies that:(1) all the views expressed in
this research report accurately reflect the research analyst©s personal views about any and all of the subject securities or
issuers; and (2) no part of the research analyst©s compensation was, is, or will be directly or indirectly related to the specific
recommendations or views expressed by the research analyst(s) in this research report.
Rating Disclosures
Distribution of Ratings/IB Services Firmwide and by Sector
KeyBanc Capital Markets
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]217 43.57 48 22.12
HOLD [HOLD]271 54.42 48 17.71
SELL [UND]10 2.01 3 30.00

ENERGY
IB Serv/Past 12 Mos.
Rating Count Percent Count Percent
BUY [BUY]31 50.82 15 48.39
HOLD [HOLD]30 49.18 19 63.33
SELL [UND]0 0.00 0 0.00

Rating System
BUY - The security is expected to outperform the market over the next six to 12 months; investors should consider adding the
security to their holdings opportunistically, subject to their overall diversification requirements.
HOLD - The security is expected to perform in line with general market indices over the next six to 12 months; no buy or sell
action is recommended at this time.
UNDERWEIGHT - The security is expected to underperform the market over the next six to 12 months; investors should
reduce their holdings opportunistically.
The information contained in this report is based on sources considered to be reliable but is not represented to be
complete and its accuracy is not guaranteed. The opinions expressed reflect the judgment of the author as of the
date of publication and are subject to change without notice. This report does not constitute an offer to sell or a
solicitation of an offer to buy any securities. Our company policy prohibits research analysts and members of their
families from owning securities of any company followed by that analyst, unless otherwise disclosed. Our officers,
directors, shareholders and other employees, and members of their families may have positions in these securities and
may, as principal or agent, buy and sell such securities before, after or concurrently with the publication of this report.
In some instances, such investments may be inconsistent with the opinions expressed herein. One or more of our
employees, other than the research analyst responsible for the preparation of this report, may be a member of the Board
of Directors of any company referred to in this report. The research analyst responsible for the preparation of this report is
compensated based on various factors, including the analyst©s productivity, the quality of the analyst©s research and stock
recommendations, ratings from investor clients, competitive factors and overall Firm revenues, which include revenues
derived from, among other business activities, the Firm©s performance of investment banking services. In accordance with
industry practices, our analysts are prohibited from soliciting investment banking business for our Firm.
Investors should assume that we are seeking or will seek investment banking or other business relationships with the
company described in this report.
Company NoteNovember 20, 2012