UPDATE: J.P. Morgan Downgrades Xcel Energy to Underweight on Key Growth Driver Changes

In a report published Tuesday, J.P. Morgan analyst Christopher Turnure downgraded the rating on Xcel Energy (NYSE: XEL) from Neutral to Underweight, and lowered the price target from $33.00 to $27.00.

In the report, J.P. Morgan noted, “Xcel has seen two key growth driver changes in 2013: 1) a challenging MN rate case outcome will now likely pressure earnings growth and 2) incremental company-owned generation projects are now more likely to be built. We therefore see more of a slower growth, higher capital deployment scenario in the near term versus management's previous expectations. XEL's mild underperformance so far this year only partially reflects the MN proceedings and is bolstered in part by the potential for outer-year new generation-driven EPS growth, in our opinion. We do not see positive RFP outcomes or maintenance of the long-term 5-7% growth target as significantly detracting from our call, as most of the benefits would occur past 2015. We are instead positioning for more disappointment in the form of 2014 EPS guidance and potential incremental equity needs as well as ongoing MN regulatory risk and are downgrading to UW.”

Xcel Energy closed on Monday at $27.70.