The aim and developments of the program are recapped in a CIBC report.
In a July 22 research note, analyst Robert Catellier reported that CIBC increased its target price on AltaGas Ltd. (ALA:TSX) to CA$21 per share from CA$20 due to "a stronger result on the distributed energy asset sale and in light of the solid progress on asset sales in general." The energy infrastructure company's current share price is around CA$20.71.
Regarding the former, AltaGas' sale of its distributed generation assets to TerraForm Power generated CA$940 million in proceeds and a 12x EBITDA valuation, "both higher than we expected," Catellier indicated.
Regarding the latter, on plan to garner CA$1.5–2 billion from asset sales, AltaGas has raised CA$1.3 billion. It should be able to achieve the last roughly CA$200 million in sales, added Catellier, and could simply do so by selling its remaining interest in AltaGas Canada. With sales of other assets in addition, the energy firm could exceed the CA$2 billion goal.
Catellier highlighted that "the company has struck a nice balance between the required urgency to remove the funding gap and remaining disciplined enough to achieve attractive valuations."
Partially offsetting some of the company's asset sale progress, however, is the near and medium-term impact of "surplus production leading to pressure on natural gas liquids prices and frack spreads," Catellier wrote. In light of those environmental factors, CIBC revised its estimates accordingly.
CIBC has a Neutral rating on AltaGas.
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Disclosures from CIBC, AltaGas Ltd., July 22, 2019
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Important Disclosure Footnotes for AltaGas Ltd. (ALA)
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from AltaGas Ltd. in the next 3 months.
· CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from AltaGas Ltd. in the next 3 months.
CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by AltaGas Ltd.
This company is a client for which a CIBC World Markets company has performed investment banking services in the past 12 months.
CIBC World Markets Inc. has managed or co-managed a public offering of securities for this company in the past 12 months.
CIBC World Markets Inc. has received compensation for investment banking services from this company in the past 12 months.
CIBC World Markets Corp., CIBC World Markets Inc., and their affiliates, in the aggregate, beneficially own 1% or more of a class of equity securities issued by this company.