10:43 AM EDT, 07/09/2024 (MT Newswires) -- Algonquin Power & Utilities ( AQNB ) retained its Sector Perform rating and US$7.25 price target at National Bank of Canada, which provided an update before Q2 earnings in an overnight Monday note.

The bank said Algonquin is nearing its mid-year target for announcing its renewable asset sales, which could fetch a total purchase price of about $3.2 billion, including AQN's near 42.2% of Atlantica Yield and not including its hydro assets ("which are unlikely to sell alongside the rest of the portfolio"). The estimate is expected to increase as Algonquin continues to invest in its portfolio, according to the bank.

National Bank said Algonquin must initially use the sale proceeds to repay debt, with excess capital used to buy back shares or for funding new growth.

The bank expects share repurchases to be limited to under $500 million.

But while an asset sale is viewed positively, National Bank said its EPS forecast for Algonquin could fall post-sale given the relatively strong EPS contribution of the renewable assets.

RBC's Q2 adj. EBITDA forecast is down slightly to $299 million (was $307 mln) with some model tweaks, and its EPS forecast falls to $0.09 (was $0.10). The bank remains Sector Perform on AQN with a $7.25/sh target based on a long-term DCF with an 8.25% discount rate and backed by a sum of parts analysis.

Algonquin's share price was down 0.7% at last look to $8.09 on the TSX.

Price: 8.10, Change: -0.05, Percent Change: -0.67