) to hold from buy.
Analyst John Edwards says the downgrade is essentially based on valuation and future natural gas prices. He says Questar's shares provided a total return of 25% since February 2003, vs. the S&P 500's gain of 23.5%. Given the company's 73% correlation between return on invested capital, gas prices, and the increased likelihood of weaker gas prices going forward (hence the increased liklihood of tougher earnings comparisions in 2005), he believes more a conservative stance on Questar's valuation is appropriate.
Edwards maintains the $2.14 2003 earnings per share estimate, and the $2.39 estimate for 2004. He lowered the $36 target to $33.