Atlantica Sustainable Infrastructure ( NASDAQ: AY ) +7.2% in Tuesday's training after RBC Capital upgraded shares to Outperform from Sector Perform with a $34 price target, seeing a potential sale of Algonquin Power's ( NYSE: AQN ) stake in Atlantica as a catalyst.
Atlantica's ( AY ) current share price is attractive, RBC analyst Shelby Tucker said, reflecting a 2023 CAFD yield of 8% as he expects the renewable energy company to gradually grow CAFD/share as it targets $300M/year of equity investment.
Although Algonquin Power ( AQN ) has not discussed it, Tucker sees the company as possibly divesting its entire 43% stake; a sale of the entire stake to one party, potentially leading to a long-term investor and/or new sponsor, or a sales process that prompts a take-private transaction, requiring a takeout premium, could provide a boost to Atlantica's ( AY ) growth profile or lead to a sale at a premium price.
Atlantica ( AY ) itself briefly ticked higher in November following a report it may have received a takeover bid .
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Atlantica upgraded at RBC on potential Algonquin Power stake sale