Commonwealth Edison Co. stock gained Monday after Wall Street analysts predicted the company`s $3-a-share annual dividend was safe, despite a rate increase dispute.
Commonwealth Edison closed up $1.50 at $30.25 on the New York Stock Exchange.
The staff of the Illinois Commerce Commission said Friday the utility deserved about half of its latest rate increase request. That would be more, however, than a rate increase previously approved by the commission but overruled by the Illinois Supreme Court. Commonwealth Edison is seeking a $1.23 billion, or 21 percent, rate boost and said Friday it was disappointed in the staff ruling.
Kidder, Peabody & Co. analyst Douglas W. Preiser said that with Friday`s recommendation from the staff of the commerce commission, Commonwealth Edison`s $3-a-share annual dividend would appear to be ”very secure.”
However, any decision that resulted in a cut in the dividend to $2 a share could drive the stock down to a range of $25 to $26 a share, he cautioned. A final decision in the April 1990 rate case is expected next March.
Morgan Stanley & Co. analyst Sanford M. Cohen continues to recommend that clients sell Commonwealth Edison shares on any market gains. The risk-reward ratio doesn`t favor owning the stock, Cohen said, noting Friday`s staff recommendation was just the ”first round in this battle.”
Cohen says there`s still uncertainty about what the hearing examiner could later recommend in the case. Also, Illinois faces a gubernatorial election in November, and there`s no telling how developments on the political front might affect such regulatory matters, he said.
