By Tom Kleckner
Entergy reported third-quarter earnings of $2.16/share Tuesday, beating analyst expectations, but its stock continued a months-long decline.
Despite beating Wall Street predictions of $1.95/share, according to Zacks Investment Research, Entergy shares have lost about $2.48/share since Monday’s close, a 3.3% drop. Its fall below $72/share continued its slide since setting a 52-week high of $82.08 in early July.
Nine of 11 analysts tracked by Zacks rate Entergy stock as a hold, with one rating it a strong buy and another a strong sell.
After the earnings report, Morgan Stanley downgraded Entergy to underweight, citing weak sales and risks to earnings from the potential disallowance of nuclear costs. It set a $68 price target.
Entergy has announced it plans to shutter its Vermont Yankee (already being decommissioned) and Pilgrim (in 2019) nuclear plants in New England, and the company is attempting to sell its James A. FitzPatrick unit in New York in Exelon. Costs related to the closures were reflected in the corporation’s 2015 earnings, Entergy CEO Leo Denault said during a conference call with industry analysts Tuesday.
Denault said the company’s Arkansas and New Orleans operating companies have made filings with state regulators seeking approval to deploy advanced metering infrastructure (AMI) as early as 2019. Denault said AMI “will lay the foundation for an integrated energy network.”
Theo Bunting, Entergy’s group president of utility operations, told analysts the corporation has projected its total AMI investment at $900 million “on a system basis,” and includes development of the technology’s backbone.
“As you go through the filings, you will see that there were some costs we’re asking to defer that will get fully incurred prior to the full functionality of the meters themselves,” Bunting said. “We also believe that infrastructure is useful for other systems as well. So I think our perspective is the cost is consistent with what we’ve seen in implementations across the country.”
“We continue to make those modernizing investments that will lower production cost [and] provide significant benefits to our customers,” said Denault, adding that the corporation’s financial outlook reflects “our prudent decision to position the nuclear fleet for sustained operational excellence.”
Denault also told analysts the company has 48 projects “totaling roughly” $480 million up for consideration in MISO’s 2016 Transmission Expansion Plan (MTEP). Entergy has submitted another $700 million of proposed projects for MTEP 2017.
“We will work with MISO on the selection process for those proposals over the course of the next year,” Denault said.
The company says it expects earnings of $6.60 to 7.40/share for the year.
