News of the sale of RBS Sempra Commodities energy solutions division to Noble Gas and Power Corp. brought mixed reactions, with Jefferies increasing the price target on Sempra Energy (NYSE:SRE) and while Fitch said they're maintaining a negative watch.
Jefferies said the reason they raised the price target from $59.50 to $60, was "We find SRE shares undervalued based on P/E valuation.
The sale of Sempra's remaining interest in the RBS Sempra Commodities JV should allow for a higher multiple on a reduced earnings level due to relatively less risk associated with Sempra's other business units."
They reiterated their "Buy" rating on Sempra Energy as well.
Fitch said they're keeping a negative watch on Sempra for the same reasons Jefferies raised the price target, but their concern is what Sempra will do with the capital.
While they say there could be a downgrade ahead, Fitch said they'll wait for the sale of Sempra's North American wholesale power and natural gas unit before making a decision.
Fitch said the wholesale power and natural gas division could fetch from $640 million to $740 million.
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