Edward Jones Research Analyst Andy Pusateri has a “sell” rating on Integrys Energy Group, Inc. (TEG), and he says he doesn’t envision a scenario that would make the stock more attractive to him in the near future.
“Integrys was a company that in my view was earning very, very much lower than its allowed ROEs. The company set forth on a plan to close that gap and I think did a very good job of doing that to the point where they are earning at or at least very near their allowed ROEs at most of their utility subsidiaries,” Pusateri says. “It’s my view that a lot of analysts and investors on the Street were basically pricing in the fact that Integrys was going to earn their allowed ROEs for the foreseeable future. Now that may be the case. They may continue to do that. But I don’t think there is any room for improvement there. They couldn’t surprise to the upside and I didn’t see a real positive catalyst.”
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Pusateri also says he doesn’t expect Integrys to deliver significant earnings growth.
“I prefer companies that are lower yielding, higher-growth companies, [and] Integrys kind of fits the opposite of that for me,” Pusateri says. “It’s one of the highest-yielding utilities that I cover and my expectation for earnings growth going forward for Integrys is slightly below average.”
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