Kept at Sector Perform at National Bank; Target US$12.002023-01-11 11:07:21 AM ET (MT Newswires)
11:07 AM EST, 01/11/2023 (MT Newswires) -- National Bank Financial on Wednesday reiterated its sector-perform rating on the shares of Algonquin Power & Utilities (AQN.TO) and its US$12.00 price target as it sees a path forward for the utility holding company whose shares have dropped 47% over the 12 months.
"AQN is down more than 50% from its 52-week-high, following its Q3'22 earnings report where it cut guidance," analyst Rupert Merer wrote. "There is uncertainty about AQN's dividend (with a stretched payout) and its plans to fund the acquisition of Kentucky Power (KP) from American Electric Power (NASDAQ: AEP, Not Rated). The stock has sold off, but we believe it could be worth US$12/sh if its makes the right moves. The path forward could include a dividend cut and a plan to close the KP acquisition. AQN has options to fund the deal, and with an investor update planned for Thursday, it has an opportunity to build some market confidence. Our 12-month target suggests a 76% total return upside, based on a DCF with a 6.6% discount rate and implying an 18x P/E multiple on 2023E (a discount to peers). However, we are remaining at Sector Perform until we have visibility on its guidance and next steps."