Bank of America (NYSE:BAC) downgraded Protective Life Corp. (NYSE:PL) today while upgrading FPL Group (NYSE:FPL). Protective Life was downgraded from “Buy” to “Neutral,” and FPL Group was upgraded from “Neutral” to “Buy.”
The downgrade of Protective Life was based largely on whether or not the company would make an acquisition which would add to its earnings per share. Bank of America said they feel the current share price reflects that as being the case.
If there is an acquisition, then the current price of the company seems in line, according to the bank, if not, then the company, based on the company’s expectations for earnings, seems to have its guidance too “aggressive.”
Concerning FPL Group, the belief by Bank of America analysts is they are the only diversified utility able to generate “positive earnings growth over the next 3-5 years.” That resulted in the upgrade from “Neutral” to “Buy,” and an increase in the price target from $51 to $54.
The bank said, “The stock trades at an 11% discount to the diversified peer group on 2012 earnings estimates and more pronounced 17% discount on mark-to-market earnings.”
Most of the negative news is behind the company, and with no known potential surprises out there, they “view … the discount valuations as an attractive buying point for the leading clean utility company.”
Bank of America concluded the downside risks of the company include “power price deterioration, slowing wind growth, and Florida regulatory risk.”
