A "buy" recommendation Taget $24.00
The Globe and Mail reports in its Tuesday, Nov. 17, edition that it is probably a stretch to say for a slow and steady dividend performer, trading in line with other regulated utilities, that Hydro One's ($21.90) shares are "overpriced." The Globe's David Milstead write that the dividend yield works out to 3.8 per cent. Mr. Milstead says the yield appears "remarkably safe." He says Hydro One has a healthy balance sheet to assist in any sort of acquisition program. The thing about Hydro One, however, is that it has certain risks that its peers do not, notes Mr. Milstead. These risks do not seem to be reflected in the stock's recent prices above $22. Veritas analyst Darryl McCoubrey was skeptical of the offering in the summer when Ontario thought it could command a market valuation of $13.5-billion to $15-billion for the company. When Hydro One instead unveiled a pricing range of $19 to $21 a share, which worked out to $11.3-billion to $12.5-billion, he became more interested in the shares. He issued a "buy" recommendation Oct. 13, saying he believed the stock was worth about $22 a share. On Friday he raised his fair value on the shares to $24, after Hydro One's third quarter earnings.