Analyst update RBCMaurice Choy * AltaGas Ltd. (ALA-T) with an “outperform” rating and $40 target. The average on the Street is $38.
Analyst: “With a roughly 55-per-cent/45-per-cent split between Utilities and Midstream, we believe the fundamentals remain sound for the company to continue delivering both EBITDA and EPS growth over the long-term that is backed by low-risk commercial frameworks (e.g., more than 80 per cent of the company’s EBITDA comes from its utilities or are under take-or-pay and fee for-service contracts). In Utilities, we highlight the roughly 8% rate base CAGR (strongest amongst the Canadian Regulated Utility companies), and potential to benefit from data center-themed growth via its presence in North Virginia. In Midstream, we like the path ahead for the company’s Global Exports platform as management continues to de-risk the business, and we favourably view the potential for higher utilization and expansion opportunities in AltaGas’ other midstream infrastructure as the basin’s volumes experience multi-year growth ahead.”