Update 2 (12:50 p.m.): Corrected first paragraph to read "Edison Mission Energy" instead of "EMCOR Group."
Update (9:45 a.m.): Updated with Thursday market open information and Jefferies quote.
NEW YORK (TheStreet) -- Jefferies increased its target price on Edison International (EIX - Get Report) to $52 and set a "hold" rating to reflect the negotiated settlement with Edison Mission Energy bondholders.
"Edison International (EIX) resolved its dispute with Edison Mission Energy (EME) bondholders with a settlement agreement that would provide EIX with a net benefit of $200 million," Jefferies wrote in its research note. "This is slightly below the $250-$700 million range that we had estimated in our report published on January 28, 2014. Edison will not be entitled to a worthless tax deduction under the settlement since it will continue to own EME."
The stock was rising 0.42% to $50.91 shortly after the market opened on Thursday.
Separately, TheStreet Ratings team rates EDISON INTERNATIONAL as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate EDISON INTERNATIONAL (EIX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EIX's revenue growth has slightly outpaced the industry average of 0.2%. Since the same quarter one year prior, revenues slightly increased by 6.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 114.9% when compared to the same quarter one year prior, rising from $215.00 million to $462.00 million.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.98, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.33 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, EDISON INTERNATIONAL has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: EIX Ratings Report