Calpine Corporation (NYSE:CPN) Inches Up On Speculation Of TPUC Changes


Dallas, Texas 10/31/2013 (Financialstrend) – Calpine Corporation (NYSE:CPN) is a $9.08 billion market capped electrical utilities player. Three days back it got a major boost to its market prospects when Goldman Sachs utility research desk increased the price target for Calpine to $24 per share. At the same time it also upped the PT for its peer NRG Energy from earlier $30 to $33. The price increase is primarily being attributed to a possible positive change in policy by Texas Public Utility Commission. The rating agency has given weight to a public affirmation by one of the commission’s three members about his resolve to seek provisions for mandatory margins in power production. This industry watchers believe will help prevent any potential large scale power blackouts across the state.

If the proposed measure which seems to have the support of two of the three members on the Utility Commission does come through, then it would mean mandatory capacity augmentation for utility suppliers like Calpine.

The potential benefits these new regulatory requirements would bring to Calpine can be gauged by the market reaction.  The stock has gained close to 3.68% in its market value in the past 5 days of trading. The current valuations are just 8.44% below the 52 week high valuations of the stock. The electricity producer seems to be sitting on a pretty solid ground with respect to demand. It has seen its sales figures go up by a huge 78% during its second quarter operations which ended on June 30. Its sales over the past 12 months trailing period has come in at $6.18 billion and net income is at $342 million. In a sign on its improving productivity, the firm was able to show a huge 77% increase in its earnings per share from its 2Q operations. All these positive indicators make it look like the analyst price target of $23 is rather conservative