Algonquin Power & Utilities (AQN.TO) maintained its Outperform rating and US$6.75 price target, National Bank of Canada said in an overnight Tuesday note, in which it provided an update following Q3, with some minor changes to its estimates.
The bank said Algonquin's target was based on a long-term DCF (discounted cash flow) with a 7.75% discount rate.
"AQN trades at a P/E of 14x our '25E and 11x our '26E, well below peers at 19x FY1E suggesting the market may not bake-in rate case success," National Bank said. "With AQN down 21% YTD versus the market up more than 20%, there could be tax-loss selling in the coming weeks, in which case we would be opportunistic."
According to National Bank, Algonquin is close to the finish line on its path to becoming a pure-play regulated utility, with the sale of AY set to close Dec. 12 and its renewable platform in early 2025.
Algonquin's share price was up 2.4% at last look to $6.87 on the TSX.
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