Calpine Corp (CPN) Message Board

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Gold/Mining/Energy : Calpine Corp (CPN)

CPN 15.25

0.0%

Mar 9 4:00 PM EST

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To: fuzzymath who wrote (20)	8/14/2000 10:08:25 AM
From: Lynn	Read Replies (1) of 80

ML initiates coverage of CPN!! From ML's Morning Notes: Calpine Corporation (CPN; $82 1/64; C-1-1-9) Generating Power and "Sizzling" Returns (Bulletin Available) 00E $1.65; 01E $1.95; Market Cap.: $11,432mn Single-best investment play on the deregulation of power generation and need to rebuild U.S. power infrastructure, in our view. This industry segment is currently experiencing very favorable market dynamics. Adding stock to our summer “sizzle” basket. Company is in the “sweet spot” of growing demand, inadequate supply and rising power prices in key regions (California, Northeast, Texas) where it has been an early entrant. Such conditions are likely to continue for at least the next 18 months. Our earnings ests of $1.65 / $1.95 / $2.80 for 2000 / 2001 /2002 are above consensus ests of $1.47 / $1.83 / $2.52. At 42x our 2001 est, the stock is priced at a 40% premium to its projected long-term earnings growth rate of at least 30%. High-growth companies such as CPN warrant such a premium or better; our price targets of $100 (9-12 mos; up 22%) and $140 (24 mos; up 71%) conservatively assume no P/E multiple expansion. Stock is a reasonable candidate for inclusion in S&P 500 (market cap $11.4 billion), perhaps when other power company names drop out as pending mergers close. (E. Parrella/S. Fleishman) Lynn

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