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Algonquin Power & Utilities (NYSE:AQN) -6.6% in Friday’s trading, extending yesterday’s 3.6% slide in its U.S. shares after slashing its dividend by 40% and issuing below-consensus earnings guidance for 2023.
Desjardins analyst Brent Stadler downgraded shares to Sell from Hold with a $7 price target, cut from $10, saying he “struggle(s) to make a compelling case to own the name based on fundamentals.”
“Guidance for 2023 was well below expectations, headwinds are anticipated through 2025 with very little earnings growth (unless it is successful with KP rate cases) and we believe the current valuation is fair,” Stadler said in his second downgrade of the stock in the last two months.
Algonquin Power’s (AQN) clearest path to earnings growth is if the company closes on the acquisition of Kentucky Power assets and successfully implements rate cases; “however, at this point, it remains unclear if AQN plans to close the deal – and investors would clearly prefer if it did not,” Stadler said.
Algonquin Power (AQN) shares are not cheap but risks have reduced after the dividend cut and reduced guidance, Trapping Value writes in an analysis newly published on Seeking Alpha.
