Ahead Of The Bell: Pinnacle West Upgraded

NEW YORK (AP) — Pinnacle West Capital Corp.'s shares are "trading cheap" and the electricity and energy provider's earnings will likely recover as rates improve, said one analyst as he upgraded the stock.

Since the beginning of the year, shares of the Phoenix-based company have shed $6.97, or 21 percent, of its value to close at $26.15 on Friday. Credit Suisse analyst Dan Eggers said that compared to its peer group, this stock price "looks compelling."

Eggers said the stock value, along with the company's constructive rate case settlement, transmission rate increases and interim rate increases, prompted him to upgrade the company's stock to "Outperform" from "Neutral."

For the full year, Eggers estimates a profit of $2.28 per share, compared with the company's outlook of $2.30 per share and Wall Street expectations of $2.31 per share. For 2010 he predicted earnings of $2.98 per share, down from Pinnacle's estimate of $3 per share and up from an average analyst forecast of $2.80. The lift in 2010 earnings signals "that earnings power is resetting," said Eggers.

Shares of Pinnacle West closed at $26.15 on Friday.