Algonquin Power & Utilities (AQN+0.8%) edges higher as BMO Capital upgrades shares to Outperform from Market Perform, citing its attractive 8%-10% EPS compounded annual growth rate guidance and low-risk assets with limited commodity price exposure.
While Algonquin's $2.85B acquisition of Kentucky Power and associated ~$650M equity offering provide deal and integration risks, the company has a proven track record in acquiring and integrating U.S. utilities, BMO's Ben Pham says.
Pham also cites an attractive 24% potential total return including a 4.8% yield, "undemanding" forward P/E (~18x consensus, with peers also currently at 18x), and relative YTD underperformance.
Seeking Alpha contributor Trapping Value thinks the Kentucky Power deal actually removes some upside potential for the stock, but still sees Algonquin in a bullish light in a recently posted analysis on Seeking Alpha.