By Senad Karaahmetovic
On Friday, Dominion Energy (NYSE:D) announced a top-to-bottom business view, focused on shareholder value improvement, and transparency. Shares of the electricity and natural gas distributor closed 3% lower on Friday.
Shares are down a further 2% in pre-open Monday after at least three brokerage firms downgraded Dominion shares on increased uncertainty.
JPMorgan analysts downgraded D to Neutral from Overweight with the price target going to $76, down from $83 per share, as a strategic review “clouds outlook.”
“While a strategic review that focused on divesting non-regulated and reaffirming prior long term EPS guidance would have created more defined parameters to analyze D’s future outlook, including actions to alleviate customer bill-pressure without definition clouds D’s future outlook. As such, until given more clarity on the parameters and D’s future outlook, we downgrade D to Neutral,” they said in a client note.
Similarly, Wolfe Research analysts cut D shares to Peer Perform from Outperform on concerns the review may result in a “large earnings re-basing.”
“Selling Cove Point and Millstone seems likely, but we think finding a more stable regulatory construct in VA is what matters most. Despite D trading at a 2x discount, we would prefer buying other value names like EXC where there isn't a big earnings risk. At an avg multiple, D reflects $0.50-$0.60 of earnings risk being embedded which seems possible, and it will take time for D to regain an avg multiple again,” they wrote in a note.
Dominion shares were also cut at Credit Suisse.