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Atlantica Sustainable Infrastructure (NASDAQ:AY) -1.9% in Wednesday's trading as National Bank of Canada downgrades shares to Sector Perform from Outperform with a $20 price target, trimmed from $23, citing limited visibility on growth, an unfinished strategic review, persistent interest rate headwinds and a soft quarter.
Atlantica's (AY) AY's strategic review has been ongoing since March 2023, which creates some uncertainty for investors, National Bank analyst Rupert Merer says, adding as part of the review the company could cut its dividend and buy back shares given they are trading at an 11% implied cost of equity.
As of the end of Q4, Atlantica (AY) had already committed investments for 2024 estimated in the range of $175M-$220M, making good progress towards its $300M annual investment target, and more recently it acquired 100% interest in two wind assets in Scotland for $66M; the company now has 2.2 GW of generation and 6 GWh of storage in its pipeline, although "visibility on bringing this pipeline to construction is low," Merer says.