Enron Corp. - University of California | Office of The President

326. On 5/18/01, CitiGroup issued a report on Enron. It rated Enron a "Buy," with a $100
price target, while continuing to forecast 01 and 02 EPS of $1.80 and $2.05 and a 20% long-term
EPS growth rate for Enron. It also stated:
Enron Corporation: REITERATE BUY; BELIEVE LEADERSHIP INTACT
• ... Stock price down 39% from 52-week high ($90 on August 23) vs. peer
group, up 1.9%
* * *
• We see ENE's business fundamentals intact, and in fact, improving.
Growth rate expansion to 25% from 20%; growing returns on capital; bandwidth
trading all good reasons to own stock – justify premium valuation.
327. On 6/7/01, CitiGroup issued a report on Enron. It rated Enron a "Buy," with a $100
price target, and forecast 01 and 02 EPS of $1.80 and $2.05, with a 20% long-term EPS growth rate
for Enron. It also stated:
Enron Corporation : Reiterate Buy; Merchant Energy
Fundamentals Remain Strong
• We reiterate our Buy rating on ENE, in the face of the recent weakness of the
stock, down 44% from 52-week high ($90 on August 23).
* * *
• In our view, recent weakness has been driven by factors not related to core
Energy Merchant business, namely India and their broadband strategy.
* * *
Continued Concern Over Broadband Business
We continue to believe strongly in Enron's bandwidth trading strategy, and see it as
a tremendous opportunity to extend their industry-leading risk management skills to
the rapidly developing bandwidth commodity market. Enron's core strategy remains
the management of price risk for customers, which is facilitated by their Bandwidth
Intermediation (trading & marketing) group. We are not deterred by what some see
as negative developments in other segments of their bandwidth efforts (i.e.
Blockbuster deal termination in Content Delivery)....
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