Zacks Investment Research downgraded shares of Companhia Paranaense De Energia (ELP) from NEUTRAL to UNDERPERFORM on October 16, 2013, with a target price of $13.00.
We believe COPEL's long-term growth prospects are bright, backed by the rising demand for electricity in Brazil. Resumption of economic growth and industrial development in Brazil will bode well for the electric utilities of Brazil, including COPEL. Despite these long-term growth opportunities, the near-term concerns surrounding the stock forced us to downgrade the stock from Neutral to Underperform recommendation. We believe higher operating expenses are a major cause of concern. In the second quarter 2013, operating expenses grew 2.1%, thereby impacting margins. In addition, high debt levels, huge dependency on rainwater for electricity generation and political interference will restrict the growth momentum for COPEL. The Brazilian governmental act of forcing electric companies to lower their power costs in exchange for renewal of concessions have already hurt few companies badly. Another such action, if repeated by the government to lower power costs for consumers, will work further against the electric utilities of Brazil.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
To get a free copy of the research report on Companhia Paranaense De Energia (ELP),
click here.
For more information about research offerings from Zacks Investment Research, visit
Zacks.com .
Be the first to comment