Exelon Corp. shares jumped Monday after a Deutsche Bank analyst upgraded his rating on the utility holding company.
THE SPARK: Analyst Jonathan Arnold upgraded his rating on Exelon to "Buy" from "Hold" and raised his price target on the company's shares by $1 to $34, saying that the stock could be a good purchase for some investors looking for a deal.
THE BIG PICTURE: Exelon, based in Chicago, is the nation's largest supplier of wholesale electric power and also runs the most nuclear plants in the U.S. It has a stake in number of energy sources, including hydropower and renewable energy. Through its companies in the Northeast and Midwest, it delivers electricity and natural gas for residential, commercial, industrial and other customers.
THE ANALYSIS: The analyst said that he has had a negative or cautious take on the company all year. However, after a 20 percent drop in its stock price this month, Arnold sees an "opportunity for the value investor".
Exelon has lagged behind the market and other utilities, but the outlook for the company has improved as gas and power prices have strengthened. Arnold also said that recent concerns that the company will cut its dividend are already priced into the company's shares.
Based on the company's current quarterly dividend of 52.5 cents, the dividend yield is 7.1 percent, compared with an average of 2.2 percent for components of the benchmark S&P 500 index.
SHARE ACTION: Shares increased 86 cents, or 3 percent, to $29.43 in afternoon trading. Its stock has steadily fallen for some time, losing more than 30 percent of its value in 2012.
- Investment & Company Information
- Jonathan Arnold