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On Wednesday, RBC Capital analysts increased the price target for Algonquin Power & Utilities Corp. (NYSE:AQN) stock to $6.50 from $6.00. The analysts maintained their Sector Perform rating on the stock.
The decision to raise the price target followed the introduction of Algonquin Power’s "Back to Basics" strategy. This plan outlined earnings per share (EPS) targets through 2027 and a path to achieving an 8.5% return on equity (ROE), with a compound annual growth rate (CAGR) of approximately 5% for the rate base.
According to the analysts, the strategy exceeded investor expectations, particularly for 2027, and provided greater clarity through that year. This has resulted in a 16% increase in the stock price.
Despite the raised price target, RBC Capital analysts maintained a Sector Perform rating. They cited execution risks and the belief that the shares are fairly valued, trading at 21 times and 17 times the midpoint of management’s 2026 and 2027 guidance, respectively, excluding HLBV income. The stock currently trades at a P/E ratio of 18.06x and offers a 4.18% dividend yield. Based on InvestingPro’s comprehensive Fair Value analysis, the stock appears slightly overvalued at current levels.
In other recent news, Algonquin Power & Utilities Corp. reported its first-quarter results for 2025, with core earnings surpassing consensus estimates, excluding one-time items. RBC Capital Markets responded by increasing its price target for the company to $6.00 from $5.50, while maintaining a Sector Perform rating. National Bank Financial, however, downgraded Algonquin Power & Utilities from Outperform to Sector Perform, citing factors such as capital expenditures and rate case awards influencing their decision. 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. Algonquin was also awarded $770 million in transmission projects under the SPP transmission plan, expected to yield attractive returns with minimal regulatory delays. Additionally, shareholders recently elected the board of directors and approved several key resolutions at the annual meeting. Algonquin Power & Utilities also filed a report with the SEC detailing its efforts to combat forced and child labor within its supply chains, reinforcing its commitment to ethical business practices. These developments come as the company transitions under new leadership, with Rod West as CEO, focusing on its core utilities business.
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