PG&E recent weakness overdone, bankruptcy fears overstated, says BofA/Merrill
BofA Merrill Lynch analyst Julien Dumoulin-Smith said he views the recent weakness in PG&E shares as overdone. Based on his latest talks with legislative stakeholders, the analyst thinks "clean up" legislation could be introduced as soon as December 3, whereby text could potentially expand SB 901 to offer both securitization levers and applicability of the customer threshold filing to the 2018 fires, Dumoulin-Smith tells investors. He believes concerns about a potential bankruptcy filing are overstated, contending that "even municipalization or break-up arguments supportive of valuation at current levels." He lowered his price target on PG&E shares to $50 from $63, but reiterates a Buy rating on the stock, noting that he estimate about a $6 per share impact to his valuation from the Camp Fire assuming a pre-tax $10B liability in his valuation base case.