Morgan Stanley analysts on Tuesday cut their earnings estimates for 11 North American electric utilities, noting the “dilution from recent equity deals and weakness in trading and merchant power.” Allegheny Energy’s estimated earnings dropped the most, with analysts cutting the company’s expected earnings through 2002 17%, to $2.90 from $3.50.

Analysts with the firm noted that while the sector’s “relative valuation is moderately attractive…uncertainty surrounding trading issues could last for some time — plus it will be difficult for this group to outperform in an improving economy.”

Other utilities receiving earnings estimates cuts through 2002 included the following: Duke Energy earnings estimate was cut 5%, to $2.60 from $2.75; also cut 5% was Pinnacle West, to $3.90 from $4.10. Off 4% were TECO Energy, to $2.25 from $2.35 and Sempra Energy, to $2.50 from $2.60 in earnings through 2002.

American Electric was cut 3% to $3.60 from 3.70, while FPL Energy was cut 2% to $4.70 from $4.80 as well as Exelon, to $4.65 from $4.75. TXU Corp.’s earnings also were cut 2% by analysts to $4.40 from $4.50, along with Constellation Energy to $2.55 from $2.60. DTE Energy was cut only 1%, with analysts expecting $3.75, down from the previous estimate of $3.80.

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