The stock of the holdings company, which is engaged in the electric transmission operations of its regulated operating subsidiaries, has "moved too far too fast," analysts said.
"ITC is up over 12% in two weeks, leading the utility rally and leaving little headroom for value-conscious investors," analysts said, adding "Close to $40 we see ITC ahead of itself on risk/reward around return on equity, particularly with mark-to-market [fair value] of the Federal Energy Regulatory Commission's (FERC) methodology pointing to 10.3% versus the 11% we model for ITC."
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Additionally, on Thursday's earnings call, CEO Welch acknowledged that implementation of FERC orders and related requests for proposal were proceeding slower than ITC had hoped at the regional transmission organizations, demonstrating that realization of projects appears to be longer-dated, analysts said.
Separately, TheStreet Ratings team rates ITC HOLDINGS CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate ITC HOLDINGS CORP (ITC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, good cash flow from operations 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."