NEW YORK (AP) — NRG Energy Inc. on Tuesday lowered its forecast for 2011 adjusted earnings following a Texas heat wave that pushed wholesale power prices higher.
The Princeton, N.J. energy company sells retail power in Texas. In August, Texas residents and businesses cranked up their air conditioners as temperatures rose, and the spike in power demand forced NRG to buy wholesale power at higher-than-expected rates.
NRG said it now expects earnings before interest, taxes, depreciation, and amortization to range between $1.775 billion and $1.85 billion. That's down from its previous forecast in August of between $1.9 billion and $2 billion.
Citi analyst Brian Chin lowered his price target to $22 from $23 per share following the announcement. The August heat wave won't hurt the company in 2012 and 2013.
Chin sees the heat was as a "one-time effect" and said "we remain bullish on the Texas competitive power market." A continued decline in NRG shares could present investors with an attractive entry point into the shares, he said.
Shares fell $1.28, or 6 percent, to $19.93 in premarket trading on Tuesday.
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