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Altagas Estimates Lifted By CIBC After Q1, 'Sector Outperformer' Maintained

 April 30, 2012 12:40 PM


(By Balaseshan) CIBC World Markets Inc. increased its earnings estimates for Altagas Ltd. (TSE:ALA) after the company's first quarter results. The brokerage maintained its "Sector Outperformer" rating and $36 price target on shares of Altagas.

AltaGas reported Q1 adjusted EPS of $0.45 versus last year's $0.42, exceeding CIBC's estimate and consensus of $0.37. Stronger-than-expected results were mainly due to higher-than-expected volume of power sold and NGL volumes extracted.

AltaGas expects throughput volume growth in its FG&P segment despite low natural gas prices due to volume increases in liquids-rich areas and start-up of new and expanded facilities. Should natural gas prices remain at current levels, AltaGas guides to 10% lower-than-expected volumes.

[Related -Ford Motor Company (F) Q2 Earnings Preview: Light on the Top Line?]

AltaGas guides to add about $1.8 billion in new and expanded assets in 2012. These assets are expected provide over $200 million of predominantly low-risk cost-of-service EBITDA on an annualized basis. In the brokerage's view, incremental cash flow should result in higher dividends.

CIBC recommends AltaGas as a unique investment opportunity in the energy infrastructure sector. The firm likes AltaGas for its balanced growth, improving risk profile, and yield upside potential.

The brokerage raised its 2012 EPS estimate for Altagas to $1.36 from $1.27 and its 2013 estimate to $1.49 from $1.46.

AltaGas, a diversified energy infrastructure company, engages in gas, power, and utilities businesses in Canada and the northern and western United States. It engages in natural gas gathering and processing, natural gas liquids (NGL) extraction and fractionation, transmission, storage, and marketing activities. It has three operating businesses, Gas, Power and Utilities.

[Related -Tripadvisor Inc. (TRIP) Q2 Earnings Preview: On Target Enough?]

ALA is trading up 1.37% at $31.90 on Monday.

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