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Sept 18 (Reuters) - Jefferies & Co slashed its price target on Constellation Energy Group Inc CEG.N by more than 66 percent, saying the U.S. power company is over-valued and that it expects it to issue equity at a substantial discount to the current share price.
The brokerage also said that Constellation may not remain solvent if it is unable to meet growing rating agency demands.
Credit rating agency Standard & Poor's has said it may cut its 'BBB' ratings on the company's debt if Constellation did not take rapid action to shore up its balance sheet.
Jeffries analyst Paul Fremont cut his price on the stock to $20 from $60. He also lowered his 2008 earnings estimate for the company by $0.10 to $5.45 a share, saying the reduction assumes dilution resulting from the lower share price of Constellation in the market today.
Constellation Energy shares have halved in value in the past three days on concerns about the lack of counterparties for its trading business due to the current financial crisis.
On Wednesday, the company said it has hired Morgan Stanley and UBS to advise it on strategic alternatives and that it was in talks with potential buyers or partners.
The stock closed at $24.77 Wednesday on the New York Stock Exchange. (Reporting by Hezron Selvi in Bangalore; Editing by Jarshad Kakkrakandy)