Per CFSB: Liquidity recovery story. Private market value of CPN's assets ($26.85).
IMHO uncertainties will keep CPN volatile and depressed for months. I own the stock and have sold a ladder of puts 7.5's to 15's. Some of the puts may need to be rolled over, but they will all expire worthless eventually.
CPN will make it the rest of the way through the current liquidity concern. CPN has the potential to be a real cash generator in 2003 +. As they said in the cc, the excess cash could be used to buy back shares (unlikely IMO), pay down debt, or help finance expansion now on hold.
They may get slapped by the judge in ENE bk. Jimp feels they will
Message 16989993
Message 16993461
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CFSB-STRONG BUY, TARGET $30
Rating: STRONG BUY
12-Mo. Target: $30
On January 31, Strong Buy rated Calpine reported 2001 EPS of $1.95, a 63% increase over the
$1.20 reported in 2000 and in-line with our estimate. Net earnings increased 82% to $680
million and EBITDA rose 59% to $1.016 billion. Total Mwh generated by CPN during 2001
increased 91% to 43.5 million Mwh from 22.8 million Mwh in 2000. The increase reflected the
addition of 13 new power plants.
Our 2002 and 2003 EPS estimates remain $1.78 and $2.40.
Calpine hosted a conference call to discuss 2001 earnings results and review its outlook for 2001.
This was the fourth conference call Calpine has hosted since early December. However, this call
was distinguished by the fact that minimal new incremental information was revealed.
Rather, the call served as an opportunity for management to reiterate and clarify the details
surrounding its updated capital expenditure budget and earnings forecast.
We view the investment case for Calpine as a liquidity recovery story. In recent weeks Calpine
has taken a number steps that verify this story remains on track.
On January 16, CPN announced that it was delaying all of its advanced development projects.
On January 10, CPN announced that it received commitments from 7 banks for a new $1 billion
unsecured credit facility. On December 19, CPN priced $1.2 billion of convertible securities.
Our 12-month target price remains $30, which reflects a 10% premium to our estimate of the
private market value of CPN's assets ($26.85). |
