Algonquin Power & Utilities (AQN) is executing well on its transition to a premium regulated utility, with US redomicile progress and regulatory momentum demonstrating tangible advancement, RBC Capital Markets said in a note.
The company's US redomiciling process will lead to some benefits, including a reduction in taxes paid on internal cross-border movements of cash and a 2 to 3 US cents EPS run-rate improvement starting in 2027, as well as the potential addition to US indices, the investment firm said Friday.
RBC further said that regulatory wins are building momentum, noting that the Missouri PSC approved the implementation of the $97 million Empire Electric rate increase, with the Kansas $8.8 million settlement and California WEMA proposed decision related to $58.1 million in wildfire recovery adding to improving regulatory outcomes.
Additionally, the company has signaled new growth potential with a Missouri large-load tariff filing planned in the very near term that would represent incremental optionality beyond the company's current rate base growth plan and position it to participate in broader utility industry load growth trends, according to the note.
RBC maintained its sector perform rating with a price target of $6.50.
Price: $5.68, Change: $-0.06, Percent Change: -1.03%