On Wednesday, BMO Capital Markets sustained its optimistic stance on AltaGas Ltd . (TSX:ALA:CN) (OTC: ATGFF), maintaining an Outperform rating and a price target of $40.00. The firm highlighted the energy company's consistent growth trajectory, evidenced by its recent announcement of a 6% dividend increase and guidance for the year 2025 that met expectations.
AltaGas's projected earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) growth rates for the upcoming years are 2% and 6%, respectively. These figures represent a slowdown compared to the company's seven-year average growth rates of 14% for EPS and 9% for EBITDA. However, the firm anticipates accelerated growth in the next few years, driven by the Pipestone II and Renewable Energy and Efficiency Projects (REEF).
The potential sale of Mountain Valley Pipeline (MVP) is cited as the next significant catalyst that could further the company's deleveraging process. BMO Capital Markets also finds AltaGas's valuation compelling, noting it trades at approximately 14 times price-to-earnings (P/E) ratio, which is attractive compared to its peers' average of around 18 times P/E.
The investment firm's analysis suggests that AltaGas offers a roughly 20% potential total return, reinforcing its decision to maintain the Outperform rating and $40 price target for the company's stock.
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