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Williams Capital Group downgrades IDACORP to 'sell' on valuation

The Williams Capital Group on June 4 lowered its investment opinion on IDACORP Inc. to "sell" from "hold" on valuation.

"While we are encouraged by recent earnings results, regulatory outcomes, and accelerating customer growth, we find the stock over-valued compared to what we estimate to be a reasonable valuation in light of current macroeconomic trends," analyst Christopher Ellinghaus wrote.

Ellinghaus has an $80 target price on IDACORP. Shares of the company closed at $89.05 on June 4.

The Idaho Public Utilities Commission recently approved a settlement stipulation filed by IDACORP subsidiary Idaho Power Co. that reflects rate changes resulting from the impact of the federal tax overhaul. The settlement also extends the utility's additional accumulated deferred investment tax credits, or ADITC, mechanism to help achieve a 9.5% return on equity in the state.

In viewing the PUC order as positive, Ellinghaus said, "Shares of IDA largely trade on the basis of the dividend and its growth and the unique ADITC mechanism makes both the company's earnings and dividend growth and stability very attractive for income investors."

Aside from the downgrade, the analyst maintained his full-year earnings estimates of $4.27 per share for 2018 and $4.45 per share for 2019. He also introduced an earnings estimate of $4.67 per share for 2020.