Will This Price Target Cit Hurt Calpine Corp (CPN) Stock Today?

NEW YORK (TheStreet) -- Calpine Corp (CPN) stock has had its price target reduced to $24 from $24.50, Jefferies said Friday. The firm said the revision was a valuation call. The stock's "hold" rating was reiterated. 

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Separately, TheStreet Ratings team rates CALPINE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate CALPINE CORP (CPN) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CPN's revenue growth has slightly outpaced the industry average of 3.4%. Since the same quarter one year prior, revenues slightly increased by 5.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 197.77% to $134.00 million when compared to the same quarter last year. In addition, CALPINE CORP has also vastly surpassed the industry average cash flow growth rate of -16.65%.
  • CALPINE CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CALPINE CORP reported lower earnings of $0.03 versus $0.45 in the prior year. This year, the market expects an improvement in earnings ($0.70 versus $0.03).
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Independent Power Producers & Energy Traders industry and the overall market on the basis of return on equity, CALPINE CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income has significantly decreased by 197.0% when compared to the same quarter one year ago, falling from $100.00 million to -$97.00 million.
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