Sector Snap: Utilities In Line With Market

NEW YORK (AP) — A host of diversified electric utilities will likely perform in tandem with the broader market as the draw of discounted utilities' stock prices are offset by a lack of catalysts in the power market, said an analyst Friday as he initiated coverage of seven utilities with an "In-Line" view.

Morgan Stanley analyst Greg Gordon said these stocks look 11 percent undervalued, but power market fundamentals remain soft with few opportunities for the group to trade higher.

Gordon said Allegheny Energy Inc. and Entergy Corp. have the best risk and reward profiles as both look cheap with profits positioned to grow, making them stand out against their peers. Gordon rates Allegheny and Entergy "Overweight."

Shares of Allegheny rose 45 cents to $27.60. Entergy shares rose $1.58 to $81.16 in afternoon trading.

Gordon said FPL Group Inc. remains the weakest of the bunch, as its capital-intensive utility and renewable power growth story is fully valued and lacks the power market leverage of many of its peers.

FPL shares rose 6 cents to $55.01.

The remaining four diversified electric utilities received "Equal Weight" ratings. Public Service Enterprise Group Inc. shares rose 27 cents to $32.01. Sempra Energy shares rose 1 cent to $51.07. Edison International shares rose 48 cents to $35.09. Exelon Corp. shares fell 25 cents to $51.56.