National BankI believe that he has the lowest target on the Street. GLTA
Seeing rising interest rates as a headwind to sector valuation and expecting inflation to continue to weigh on costs, National Bank Financial analyst Rupert Merer lowered his rating for Algonquin Power & Utilities Corp. to “sector perform” from “outperform” ahead of the release of its first-quarter financial results on May 12.
“We adjusted our model to account for good weather (stronger wind in the U.S., cool weather in Missouri). However, with some adjustments to our calibration on AQN’s regulated returns, our adj. EBITDA falls by 2 per cent to $338-million (was $345-million, consensus $334-million ), with AFFO at $232-million (was $235-million). There could be some moving parts in Q1, with the NYAW acquisition in January, timing of rate increases and possible sell-downs of assets to recycle capital.”
Mr. Merer is now projecting earnings per share for the quarter of 21 US cents, down a penny but in line with the Street’s view. His full-year estimate fell 2 US cents to 73 US cents, in line with company guidance of 72-77 US cents and 2 US cents above the consensus..
“In 2022, AQN should benefit from a $36-million revenue increase at its Empire utility and about $25-million for BELCO, both of which were approved in March,” he said. “AQN should close the acquisition of Kentucky Power in mid-2022, with the goal to ‘green the fleet’ over time. However, the asset could under-earn initially and growth investments are not certain. The U.S. anti-dumping investigation looking at solar panel imports could slow some development projects, specifically the New Markets and Chevron solar projects that had plans to install in 2022E. With Q1 results, we will look for updates on AQN’s investment plan, which calls for $12.4-billion in capex over the next five years. AQN could see incremental upside from projects in its 3,835 MW prospective wind and solar pipeline.
Mr. Merer maintained a target price of US$16 per share. The average is US$17.43.