Ameren and Exelon downgraded to Neutral at JPMorgan after ICC rate orders

JPMorgan downgraded Exelon (EXC) and Ameren (AEE), both to Neutral from Overweight, after both received “challenging” rate orders and grid plan rejections last week from the Illinois Commerce Commission, or ICC. While valuations have slipped since the orders, the firm views the selloff as warranted given the authorized ROEs’ material EPS headwind to both utilities and potentially additional earnings downside risk as the ICC indicated that total rate base and methodology will be subject to change after the commission reviews each refiled grid plan. The firm now has an $80 price target on Ameren shares and $41 price target on Exelon shares.