Edwards Jones Analyst Andy Smith recently upgraded Laclede Group Inc (LG) from a “hold” to a “buy.” He says his improved view on the stock is in part driven by the company’s recent acquisitions under the leadership of CEO Suzanne Sitherwood.
“She really made it known that the company was going to grow through acquisition as well as some other ways, but they really followed through on it, and they bought a company within Missouri last year called MGE,” Smith says. “Then more recently they bought Alabama Gas Company from Energen (EGN). The MGE acquisition essentially doubled the size of Laclede, and then Alabama Gas Company increased the customer base by another 400,000-plus customers.”
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Smith says the acquisitions have transformed Laclede, and that the Alabama Gas Company acquisition further increases the proportion of Laclede’s profits that come from regulated business.
“We think going forward, 95%-plus of profits will come from regulated businesses,” Smith says. “The regulatory environment was adequate with Missouri…Alabama is noted by third parties as one of the most favorable regulatory environments for utilities in the country.”
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