Sierra Pacific Resources, which worried about slipping into bankruptcy several years ago, now ranks among the top-rated midsized companies.
Bloomberg News recently listed Sierra Pacific, the parent company of Nevada Power Co. and Sierra Pacific Power Co., among the public companies in the Standard & Poor's 400 Mid-Cap Index with top ratings from stock analysts.
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Sierra Pacific rated 4.5, with 5 being best. Shares in Sierra have gained 24.1 percent over the past year.
The four analysts who follow Sierra Pacific project the shares will hit an average target price of $17.50 over the next six to 18 months. Sierra shares closed Wednesday on the New York Stock Exchange at $16.26, up 7 cents, or 0.43 percent.
"They're a power generator with growing population and growing demand for power," said Ivan Feinseth, an analyst with Matrix USA, a New York firm that follows Sierra Pacific.
Matrix USA has rated Sierra Pacific a "strong buy" for the last year.
As recently as 2002, Sierra Pacific executives publicly conceded that it's Nevada Power subsidiary might be forced to file for bankruptcy because the Public Utilities Commission cut a $922 million, 21 percent energy rate request, to $486 million. Rating agencies lowered bonds of the holding company and its subsidiaries to junk level.
"They've turned things around since December '03," said Eric Witkowski, chief of the attorney general's Bureau of Consumer Protection.
Earlier this year, the Nevada Supreme Court ordered the utilities commission to boost rates by $180 million, concluding the commission cut the 2002 rate increase too much.
Merrill Lynch analyst Jonathan Arnold recently reported that Sierra Pacific Resources shares are trading for 9 percent below fair value and cited a "constructive regulatory environment in Nevada," given the OK of the $3.7 billion coal-fired power plant near Ely that the utility company plans.
"With no dividend and a higher-risk rating, this is not sufficient for us to recommend the stock at this time," the report said.
Citigroup analyst Greg Gordon raised his recommendation on Sierra Pacific to "buy" from "hold" after the commission approved the Ely project.
"At present, we view Sierra Pacific Resources as a late-stage transitional story as the company moves from distressed utility to a stable vertically integrated utility without any significant non-utility business," the Citigroup report said.
Deutsche Bank repeated its "buy" rating after the commission approved the Ely plant. The securities firm noted that Republican Jim Gibbons won the race for governor.
"We view the Gibbons victory as a positive for Sierra Pacific Resources, as he appears to be supportive of the needed utility development in the state," Deutsche Bank analyst John Kiani commented.
Deutsche Bank predicted that the number of customers at Nevada Power will grow by an average 3.8 percent though 2014, "driven by strong residential as well as commercial growth in Las Vegas and surrounding areas."
Jack Leone, a Sierra Pacific Resources spokesman, said the company does not comment on specific analyst reports.
