Dec 12 (Reuters) - Goldman Sachs downgraded the U.S. regulated and diversified utilities to “neutral” from “attractive,” citing the sector’s relative outperformance, weak demand and expected lower commodity prices for 2009.
The weak economic outlook for 2009, likely carrying into 2010, drives decreased expectations for electricity demand and power prices, the brokerage said.
“Lower electricity demand and commodity price expectations will weigh on the sector, although long-term valuation metrics still appear modestly attractive,” the brokerage said.
The brokerage expects near-term headwinds for the regulated utilities, given expected weak demand trends and likely negative revisions as consensus estimates for 2009 and 2010 appear high.
Lower electric demand and expected power prices decrease the earnings potential for diversified utilities, the brokerage said.
The brokerage also revised its ratings on six companies within the sector. For the alerts, double click [ID:nWNAB2147] (Reporting by Mary Meyase in Bangalore; Editing by Deepak Kannan)