) to market perform from buy.
On Friday the global energy services provider cut guidance. Analyst Shelby Tucker says the magnitude of the company's downward revision surprised her. She says her main concern is the credit quality of TXU Europe. Tucker notes overall weakness in the Great Britian market. She predicts $400 million in equity issuance in mid-2003 by the parent company to support its Baa3 and BBB+ ratings by Moody's and S&P, respectively.
Tucker expects TXU to maintain its attractive 9% dividend yield, but believes any action by a ratings agency would offset any gains. She thinks the company's $3.20-$3.25 2002 earnings per share target is achievable, but says the $3.45-$3.55 2003 earnings per share estimate looks challenging.
She slashed her $4.30 2002 earnings per share estimate to $3.20, and cut the $4.75 2003 estimate to $3.35.