- Exelon (EXC +0.7%) is upgraded to Overweight from Equal Weight with a $37 price target at Morgan Stanley (NYSE:MS), which says EXC offers attractive growth at a compelling valuation with room for meaningful expansion of return on equity at acquired utilities.
- Stanley says EXC has underperformed peers in recent months due to concerns over declining gas and power prices, concerns over its recently acquired Pepco utilities and the reduced likelihood of federal carbon regulations following the presidential election, but the stock's decline is overblown in relation to the slight fundamental decline in gas and power prices.
- The firm notes several drivers that could result in $1 in EPS improvements over the next year, including legislative support for Illinois nuclear power plants, lower corporate taxes under a federal tax reform, higher commodities prices, and improving allowed returns at its ComEd utility.
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