Brokerage firms downgrade Duke

CHARLOTTE, N.C. – Duke Energy’s shares continued to fall Monday as three brokerage firms downgraded its stock, saying they were concerned about federal investigations into the utility’s energy trading practices.

The company also said it placed an unnamed senior manager in its trading division on paid administrative leave.

After falling below $20, Duke’s shares regained considerable ground to close at $23.70, down $1.05, or 4 percent. The company’s stock price fell 11 percent on Friday and is down 24 percent since the beginning of July.

Duke Energy said Friday that it had received subpoenas from federal authorities and was responding to the requests for information about its energy trading practices.

Duke Energy owns the Maine Independence power plant in Veazie, Maine, and is majority owner of the Maritimes and Northeast natural gas pipeline that runs from Nova Scotia through Maine.

On Monday, Salomon Smith Barney analyst Ray Niles cited the subpoenas in a note that accompanied his 2002 and 2003 earnings estimates, which were lowered to $2.55 and $2.70, down from previous estimates of $2.60 and $2.85.

Niles said the subpoenas from the Commodities Futures Trading Commission and the U.S. Attorney’s office in Houston “on wash trades continue to heighten regulatory risk concerns for Duke and the industry.”

Similarly, brokerage firm Goldman Sachs on Monday cut its stock rating for Duke Energy to “market perform” from “recommended.” It also lowered its 2002 earnings per share estimate to $2.50 from $2.75 and cut its 2003 outlook to $2.65 from $3.

Morgan Stanley also lowered its rating on Duke Energy to “equal-weight” from “overweight,” saying it expects Duke’s 2002 earnings forecast to be near the bottom of its $2.54 per share to $2.77 per share range.

Meanwhile, Duke Energy spokesman Terry Francisco said Monday that a senior manager in Duke’s Houston-based energy trading operations had been put on paid administrative leave while the investigators look into the company’s trading practices.