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Energy Firm's 'Progress On Asset Sales Leads To Bump In Price Target'

Streetwise Reports, Streetwise Reports
0 Comments| July 26, 2019

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The aim and developments of the program are recapped in a CIBC report.

Click to enlarge


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.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from CIBC, AltaGas Ltd., July 22, 2019

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Analysts employed outside the U.S. are not registered as research analysts with FINRA. These analysts may not be associated persons of CIBC World Markets Corp. and therefore may not be subject to FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers.
Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

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.



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