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Tuesday, shares of Capital Power Corp (TSX:CPX:CN) (OTC:CPXWF) saw an upgrade in their stock rating by BMO Capital Markets, moving from Market Perform to Outperform, while maintaining a price target of Cdn$64.00. The upgrade follows the completion of Capital Power’s substantial $667 million equity offering and the announcement of its $3 billion acquisition in the PJM market.
BMO Capital Markets analysts cited several reasons for the optimistic outlook on Capital Power’s stock. Despite acknowledging some challenges due to increased uncontracted power exposure, analysts believe the significant accretion, strategic benefits, and enhanced growth potential from the recent acquisition outweigh the concerns.
The firm’s analysts pointed out that the potential total return of approximately 38% and the stock’s attractive valuation, which sits at roughly 7.5 times EBITDA compared to the broader coverage average of about 11 times, present a compelling risk/reward scenario for investors.
The unchanged price target of Cdn$64.00 comes as BMO Capital Markets resumes coverage of Capital Power’s shares after a period of restriction. The analyst’s statement emphasized the positive strategic benefits and enhanced growth potential as key factors supporting the upgrade.
Capital Power’s recent moves, including the equity offering and the PJM acquisition, are seen as significant steps in the company’s expansion and growth strategy, positioning it favorably in the market according to BMO Capital Markets’ analysis.
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