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On Thursday, BMO Capital Markets adjusted its financial outlook on Capital Power Corp (TSX:CPX:CN) (OTC: CPXWF), with analyst Ben Pham revising the company’s price target downward to Cdn$64.00 from the previous Cdn$68.00. Despite this change, the firm maintained its Market Perform rating on the energy company’s stock.
The revision was prompted by Capital Power’s fourth-quarter adjusted EBITDA, which did not meet market expectations. However, Pham noted that the management’s perspective on the potential for data center (DC) opportunities in Alberta remains positive. This optimism is bolstered by encouraging developments in the artificial intelligence sector, as seen with companies like Meta (NASDAQ:META) and NRG.
Capital Power has taken steps to mitigate the risks associated with its Alberta operations. The company has hedged a significant portion of its exposure in the region, covering both power generation and gas feedstock. Additionally, it holds a substantial cash reserve, amounting to $865 million.
Pham’s commentary also suggested that while the target price has been adjusted, there may be an opportunity for agile investors to capitalize on the stock’s year-to-date sell-off, particularly in light of recent news about DeepSeek, an AI-related initiative. Despite the lower price target, BMO’s continued Market Perform rating indicates a neutral outlook on Capital Power’s stock performance.
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