Analyst update National Bank Financial on Thursday maintained its sector-perform rating on the shares of Algonquin Power & Utilities (AQN.TO, AQN) with a US$12.00 price target after the company said it will continue with its contentious acquisition of Kentucky Power after the purchase was rejected by regulators while cutting its dividend by 40% and selling assets. It also pegged fiscal 2023 earnings at between US$0.55-US$0.61 per share.
"AQN is doing what it must do to right the ship and avoid dilution," analyst Rupert Merer wrote. "... While the update is largely as anticipated, the earnings guidance provides a negative bias to our view. The company has provided a roadmap to avoid additional equity financing needs, but there is no quick fix here and there could be some moving parts as the company executes its M&A strategy. We will look for more information surrounding its highlights at the 8AM call to provide further analysis. Our US$12/sh target is based on a long-term DCF with a 6.6% discount rate."