From Standard & Poor's Equity Research
Citigroup upgraded its investment recommendation on shares of ONEOK (OKE) to buy from hold. The firm also lifted its earnings estimates on the utility.
Analyst Faisel Khan says he's revising EPS estimates for ONEOK: from $2.11 to $2.33 for 2006; from $2.09 to $2.51 for 2007; and from $2.09 to $2.63 for 2008. He says three key drivers for the shares include: 1) potential share buyback from redeployment of over $800 million of cash from the company's recent assets sales (adding 22 cents per share in 2007, and 35 cents in 2008, assuming $750 million of share repurchases); 2) rate relief in Kansas (adding 22 cents in 2007); and 3) over $860 million of capital expansion projects in coming years (adding 6 cents in 2008 and 9 cents in 2009). The analyst raised his $33 12-month price target to $40.