Energy Winners and Losers: Constellation

An expected decline in natural gas prices over the next two years could cut away at profits for utility companies, said one analyst who lowered his earnings estimates and price targets for a number of utilities on Wednesday.

Natural gas prices rose 1.6 cents to $3.705 per thousand cubic feet in Wednesday afternoon trading, boosting the share price of a number of utility companies.

Barclays Capital analyst Gregg Orril lowered his natural gas price predictions for 2009 and 2010 to $4.10 and $6.50 per mcf, respectively, from an earlier estimate of $6.36 and $7.16 per mcf.

Subsequently, Orril cut his 2009 profit estimate for Constellation Energy Group (CEG Quote), Ameren (AEE Quote), First Energy , Edison International (EIX Quote), Dominion Resources (D Quote) and Allegheny Energy (AYE Quote).

Orril cut his 2009 profit estimate for Ameren to $2.83 per share from $2.90 per share, but maintained his rating for the stock at "Equal weight", noting that it is fairly valued. He lowered his price target on the company to $23 from $28. Shares of Ameren slid 21 cents to $22.06.

For First Energy, Orril lowered his earnings prediction for the year to $4.10 per share from $4.55 per share, but noted that the company could face some "interesting upside potential" in 2011 to $5 or more from Ohio market prices in the second half of 2011, expiration of Pennsylvania power subsidies at $41.50 mwh and Bull Mountain coal sales. He also cut the company's price target to $53 from $62. Shares of the company rose 63 cents to $39.20.