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CSFB Says Enron Undervalued


CS First Boston says troubled energy merchant Enron (ENE) is undervalued despite its issues.

Analyst Curt Launer says that concerns about liquidity and the performance of Enron's trading units caused a further 28% decline in the stock price on Nov. 21. He thinks related price drops of Duke Energy (DUK), El Paso Corp. (EPG), and Williams Cos. (WMB) were significantly overdone.

Launer continues to believe a deal with Enron would be a dramatic plus for Dynegy (DYN). He says Enron used about $3 billion in cash during the past month in collateral, margin requirements, and other costs. The analyst thinks it will recover most of its collateral as contract performance continues. He believes the company will ultimately trade up in concert with the 0.2685 stock ratio of the Dynegy deal. Launer has a $25 target, and rates the shares strong buy.


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