American Electric Hits Low On Outlook Reduction

NEW YORK (AP) — Shares of American Electric Power Co. fell to a multi-year low Tuesday, a day after the power generator slashed its 2009 earnings forecast and said it would issue more stock and cut capital spending.

After the market closed on Monday, the Columbus, Ohio-based company lowered its 2009 earnings-per-share forecast to a range of $2.75 to $3.05 from a prior prediction of $3 to $3.40.

The power company said it plans to sell about 50 million shares to the public, and underwriters could get another 7.5 million shares to cover over-allotments. The total would equal about 14 percent of the company's current shares, according to a recent regulatory filing. AEP said it would use the proceeds to reduce debt.

AEP said dismal economic conditions and the dilution caused by issuing more shares prompted the outlook reduction.

BMO Capital Markets analyst Michael Worms lowered his 2009 and 2010 earnings estimates and predicted that the capital spending cuts could hurt earnings growth beyond 2010. In a note to clients, he said that growth has been primarily driven by return on infrastructure investment.

Worms maintained a "Market Perform" rating and lowered his price target to $28 from $35.

Elsewhere, Citi analyst Greg Gordon said his reduced his 2009 profit estimate and lowered his share price target to $33 from $35. Gordon rates the company "Buy."

In morning trading, shares climbed 23 cents to $25.31, but the stock earlier traded at $24, its lowest level since 2003.