DUK - Allete downgraded at BofA on cautious renewables valuation after Duke deal
2023-06-27 12:58:29 ET
Allete ( NYSE: ALE ) -1.1% in Tuesday's trading as Bank of America downgraded the stock to Underperform from Neutral with a $54 price target, cut from $63, after recent announced commercial renewables transactions in the high single digits on EV/EBITDA have caused the bank to shift to a more cautious stance on the company's unregulated renewable generation assets.
BofA's Julien Dumoulin-Smith noted Duke Energy ( DUK ) recently monetized its commercial renewables portfolio at ~9x EBITDA, among the lower marks in the sector recently, and he expects the market will apply a similarly lower valuation to Allete's ( ALE ) wind portfolio.
The analyst also said he is more cautious on the Minnesota jurisdiction after the state's utilities regulator surprised the market with a punitive order in Allete's ( ALE ) rate case earlier this year and followed with a recent disappointing order for peer utility Xcel Energy.
More on Allete:
- Financial and valuation comparison to sector peers
- Analysis: Allete: Magic Of DGI But Clean Energy A Drag On Earnings Growth
- Stock price return: Down 9% YTD, down 1.5% in the past 12 months
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Allete downgraded at BofA on cautious renewables valuation after Duke deal