Raised Targets Will post the RBC report shortly. GLTA
RBC’s Robert Kwan increased his AltaGas Ltd. target to $34 from $32 with an “outperform” rating, while Scotia’s Robert Hope moved his target to $35 from $33 with a “sector outperform” rating. The average is $34.18.
“AltaGas’ reported a strong Q1 with tailwinds from solid Global Exports margins and volumes,” said Mr. Hope. “Management reiterated its 2024 guidance ranges with some seasonality tweaks, and outlined key progress made on its Ridley Island Energy Export Facility (REEF) project. We increase our 2024 EPS estimates slightly to reflect the strong Q1, though our longer-term estimates are largely unchanged. With REEF’s sanctioning around the corner, it appears, we add the project to our model and valuation. We view the project as $1.75 per share of value for AltaGas. This drives our target price to $35 from $33. The core reasons we like AltaGas include: (1) strong utility growth, (2) strengthening balance sheet and easy-to-execute financing plan, (3) increasingly visible and strengthening midstream growth outlook, and (4) attractive valuation. At 10.7-per-cent 2025 estimated distributable cash flow yield, AltaGas is trading at a slight premium to the midstream group (which are trading at an average of 11.4 per cent), despite its significant higher value utility assets. At 12.8 times 2025E P/E, we view AltaGas as a way for investors to get exposure to high-growth utility assets at a discounted valuation (the other Canadian utilities are trading in the 13-19 times range).”