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Strategies & Market Trends : Z Best Place to Talk Stocks

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To: Larry S. who wrote (49862)	11/24/2003 6:07:15 AM
From: Mark Adams	Read Replies (2) of 53068

CHG got a mention in Barrons. I checked EV/EBITDA on Utes in The Trader column, and wasn't impressed. May not mean anything. EV/EBITDA is one of many approaches. I would like to find what Warren B paid in terms of valuation for MidAmerican. Spent several hours listening to WMB conf calls this weekend. I'm feeling better about where they are and where they are going. WMB has some of the same unhedged tolling risks as ILA, but their pipes and e&p seem to offer them more breathing room. Was going to try to sort out EP, but haven't. I'd say EP is the closest comparable to WMB, but I don't have the same level of confidence in mgmt at EP. CNP- you best look over some research from Goldman Sachs- they say sell. The first couple of paragraphs are below. Still don't know much about the drugs. Did peek at a 10 year chart, and saw the longer term out performance. I suspect passing the medicare bill might give them a sigh of relief, as mucho attention on drug cost disparity between US and rest of the world consumers. --- 10/22/03 CNP: Investors Should Thin Positions on Strength CNP shares were up 5% on Tuesday to $9.95, due to strong near-term earnings prospects associated with its wholly owned unregulated generation subsidiary, TGN. Although a near-term positive, we reiterate our belief that contributions from TGN and non-cash contributions from ECOM will be eliminated by 2005, creating a significant decrease in CNP's consolidated EPS. When analyzing CNP's long-term earnings power we view it as one the most overvalued stocks in our coverage list. We rate CNP Underperform and our coverage view is Neutral. We believe the main question investors are asking themselves focuses on CNP's current state of strong earnings and whether CNP can somehow retain its majority equity stake in TGN which would somehow "prolong the party." Our analysis suggests this is not a realistic outcome for CNP and its shareholders. Accounting for CNP's business strategy, consolidated credit profile, and TGN's longer-term risks we believe the company understands that it must shed TGN in order to realize its full carrying value and repair its highly leveraged balance sheet. We interpreted several of management's Q&A responses as clear when investors and analysts asked about this issue. We believe recent developments will really only impact the timing related to TGN's ultimate sale. In our view CNP should be looked at in a proforma fashion with a focus on the "stand alone" financial potential associated with the company's transmission & distribution business and target credit profile.

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