RE:Altagas Ltd: Credit Suisse (SIX:CSGN) raises to "outperform"(from today's Globe and Mail)
Citing the potential stemming from its acquisition of an increased ownership stake in Petrogas Energy Corp., Credit Suisse analyst Andrew Kuske raised AltaGas Ltd. (
) to “outperform” from “neutral.”
“On Friday, AltaGas Ltd (ALA) announced the acquisition of an interest in Petrogas Energy Corporation in a somewhat expected transaction – albeit with a few twists, including: greater ownership and better economics than we anticipated and a series of positive details on the privately held Petrogas,” he said. “In our view, at the core of Petrogas is the Ferndale terminal and a Fort Saskatchewan rail terminal that should help ALA’s energy infrastructure midstream platform. We believe the underlying economics, future strategic potential and ALA’s valuation translate into an attractive risk-adjusted return and, thus, we upgrade the stock.”
After raising his 2021 earnings expectations, Mr. Kuske increased his target for AltaGas shares to $20 from $18. The average is $20.47.
“AltaGas is uniquely positioned with energy infrastructure assets in core parts of the Western Canadian along with a series of US-based utility assets,” he said. “The stock provides interesting exposure to frac spreads and selected export movements along with an ability to eventually drive greater returns from the core utility business.”
Elsewhere, Raymond James' David Quezada raised his target to $22.50 from $22, keeping an “outperform” rating.
Mr. Quezada said: “We maintain our constructive stance on Altagas — a function of several factors including 1) the company’s strong regulated utility rate base growth and rising ROE’s; 2) a structural advantage in propane exports at RIPET and Ferndale (which this transaction bolsters, in our view); and 3) a discounted valuation relative to each of the utility and midstream peers. We believe this increased stake in Petrogas comes at an attractive valuation.”