On Tuesday, Scotiabank reaffirmed a Sector Outperform rating and a C$52.00 price target on Emera Inc. (EMA:CN) (OTC: EMRAF), following the company's announcement of strategic capital reallocation. The utility company's new strategy includes a reduction in the dividend growth rate, the introduction of 5%-7% earnings per share (EPS) growth guidance, and an extension of its 7%-8% rate base growth guidance up to 2029.
Emera's management has reiterated that their second asset sale process is still in progress, which analysts believe pertains to New Mexico Gas. The company has clarified that the latest strategic updates are not indicative of the status or potential results of the ongoing asset sale. The announcement was deemed significant enough to warrant immediate disclosure, despite the asset sale details remaining unclear.
While the end of June was previously targeted for clarity on asset sales, delays in such processes are not uncommon. Scotiabank's estimates for Emera's financial performance have not significantly changed following this announcement. Emera currently trades at a multiple of 14.1 times its estimated 2025 earnings, compared to its industry peers Fortis (NYSE:FTS) at 15.9 times and Hydro One at 19.9 times.
The bank views Emera's shares as attractively valued and anticipates a positive market response to any forthcoming news on asset sales. The guidance provided by Emera outlines a clear growth trajectory for the company, aligning with the bank's expectations and reinforcing the positive outlook for the stock.
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