Atmos Energy downgraded at Wells Fargo following strong YTD gains (NYSE:ATO)

Atmos Energy (NYSE:ATO) -0.8% in Monday’s trading as Wells Fargo downgraded to Equal Weight from Overweight with a $128 price target, trimmed from $132, saying the stock trades at a healthy premium to gas LDC peers following a strong YTD performance, although the bank continues to like the company and would look to be more constructive on relative pullbacks.

Atmos Energy’s (ATO) premium is not unreasonable given its highly visible 6%-8% EPS growth outlook, strong execution track record and healthy balance sheet, but Wells Fargo analysts said the stock now trades at one of the highest multiples among electric and gas utility names, making further multiple expansion unlikely.

Potential downside risks for Atmos (ATO) include regulatory risk, primarily in Texas; potential pushback to rate increases; and fluctuations in the Rider Rev mechanism at APT.

Source: seekingalpha.com