CA - Algonquin double upgraded to Buy at BofA as Kentucky Power sale seen failing

Algonquin Power & Utilities ( NYSE: AQN ) +3.3% in Thursday's trading after Bank of America double upgraded shares to Buy from Underperform with a $9 price target, now seeing a "path to a re-rating" for shares that have traded at a significantly depressed valuation since November.

BofA analyst Dariusz Lozny doubts the Kentucky Power sale will close, which would serve as a "key upside catalyst" for Algonquin ( AQN ) shares.

Algonquin Power ( AQN ) and counterparty AEP recently re-filed with the Federal Energy Regulatory Commission for approval of the Kentucky Power sale, but Lozny still thinks it is unlikely the transaction will close by April 26, which would cause AQN to pay the $65M breakup fee to call off the deal.

"We would see this as a net positive for shares as the company would reduce near-term balance sheet pressure," Lozny wrote.

Last month, Algonquin Power ( AQN ) cut its dividend by 40% and guided for 2022 earnings below consensus .

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