Will This Downgrade Negatively Affect ITC Holdings (ITC) Stock Thursday?

NEW YORK (TheStreet) -- ITC Holdings Corp. (ITC) was downgraded to "neutral" from "overweight" at JPMorgan (JPM) today.

The firm lowered its rating on the company, which is engaged in the electric transmission operations of its regulated operating subsidiaries, based on a valuation call and a lack of visibility in its developmental plans.

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TheStreet Ratings team rates ITC HOLDINGS CORP as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ITC HOLDINGS CORP (ITC) 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 robust revenue growth, notable return on equity, expanding profit margins, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

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

  • ITC's revenue growth has slightly outpaced the industry average of 9.1%. Since the same quarter one year prior, revenues rose by 19.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 35.77% and other important driving factors, this stock has surged by 25.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • ITC HOLDINGS CORP has improved earnings per share by 35.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ITC HOLDINGS CORP increased its bottom line by earning $1.47 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($1.88 versus $1.47).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Electric Utilities industry average. The net income increased by 37.7% when compared to the same quarter one year prior, rising from $50.19 million to $69.14 million.
  • 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, ITC HOLDINGS CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: ITC Ratings Report
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