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Brokerage predicts long-term trouble for Allegheny stock

October 11, 2002|y LAURA ERNDE

At least one brokerage firm predicts that Allegheny Energy stock, which has taken a nosedive recently, won't make a quick recovery.

Salomon Smith Barney cut its price target Thursday for the Hagerstown-based Fortune 500 company from $22 to $5, according to Reuters. That means the price is expected to be $5 in about a year.

Allegheny stock hit a low of $2.95 cents per share on Thursday before rebounding to close at $4.40 cents a share. As recently as April, the stock was trading at $43.86 per share.

Salomon Smith Barney analyst Daniele Seitz, in a research note, estimated Allegheny will need to roll over $940 million in credit lines and require an extra $300 million in cash over the next six to 12 months to remain liquid. The company also said previous earnings targets are too high, without giving further details.

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"Given low visibility, possible dividend elimination, and default status, our risk rating goes to speculative," wrote Seitz, who maintained her "underperform" rating on the stock.

Seitz declined to comment further on the report.

As a policy, Allegheny does not comment on analyst reports, said spokeswoman Debra A. Beck.

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