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We reaffirm our Neutral recommendation on Indiana based utility NiSource Inc. (NI - Analyst Report).The company’s financial performances were a mixed bag in the first nine months of 2012  with earnings beating the Zacks Consensus Estimate and revenues falling short.

Why the Reiteration?

The company has some lucrative high-quality transmission programs lined up in the next couple of years. These include the East and West side expansion projects and the Big Pine Gathering system that will act as outlets to Marcellus produce in the markets. In addition, NiSource is expected to capitalize from its Hilcorp joint ventures in the near term. The company’s infrastructure modernization drive will also add value to its customers and shareholders.

However, uncertainty in the outcomes of Massachusetts and Pennsylvania rate case and price sensitivities are headwinds that could deter growth opportunities of the company. Other generic threats are adverse weather conditions and regulatory pressure. Reflecting these broad fundamentals, the company presently carries a Zacks #3 Rank (Hold).

NiSource is optimistic about meeting its full-year 2012 earnings projection in the range of $1.40 to $1.50 per share. The Zacks Consensus Estimates for 2012 is $1.45 per share, at the mid-point of the guidance range issued by the company.

For fourth quarter 2012, the Zacks Consensus Estimate stands at 44 cents per share. NiSource projected earnings growth of 7.6% and earnings surprise in last three quarters leads us to believe that the company will perform well in the near term.

Other Stocks to Consider    

Other stocks in the utility sector that are presently doing favorable business include Huaneng Power International, Inc. (HNP - Snapshot Report), and Pike Electric Corporation (PIKE - Snapshot Report). Both these companies carry a Zacks #1 Rank (Strong Buy).

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