Lehman Brothers downgraded Allegheny Energy (AYE ) to market perform to buy.
Analyst Daniel Ford says he expects an oversupply of power in the U.S. to 2006. He sees only modest contribution from the company's 2,600 megawatt plant in development. He also notes the company's uncertainty over equity needs; the long-dated, potentially volatile trading book; and contract renegotiation in California and Nevada. He cut the $3.50 2002 earnings per share estimate to $3.20, and trimmed the $3.75 2003 to $3.30. He has a $32 target.