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On Wednesday, National Bank Financial downgraded Algonquin Power & Utilities Corp . (TSX:AQN:CN) (NYSE:AQN) stock from Outperform to Sector Perform. The firm’s analysts maintained a price target of $6.75, citing several factors influencing their decision.
Algonquin Power & Utilities recently saw a 16% rise in its stock following an investor update. The company’s earnings per share guidance aligns with consensus estimates for 2025 and 2026, and it is ahead for 2027. However, these projections lag behind previous forecasts due to assumptions related to capital expenditures, HLBV (non-cash), and rate case awards.
The company plans to invest $2.5 billion into regulated assets over the next three years, aiming to increase its rate base to $9.1 billion by 2027. Recently, Algonquin was awarded $770 million in transmission projects under the SPP transmission plan, which are expected to yield attractive returns and face minimal regulatory delays.
Analysts at National Bank Financial believe that Algonquin Power & Utilities could support future growth through asset recycling. They maintain a price target of $6.75, based on a long-term discounted cash flow model with an 8.25% discount rate, equal to 15 times the estimated earnings per share for 2027.
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