On Wednesday, BMO Capital Markets updated its view on shares of Capital Power Corp . (TSX:CPX:CN) (OTC: CPXWF), resuming coverage with a Market Perform rating. The firm has raised the price target for the energy company to Cdn$68.00, up from the previous Cdn$56.00. This adjustment follows Capital Power's recent completion of a Cdn$460 million equity offering, which increased the number of shares outstanding by approximately 6%.
The analyst at BMO Capital Markets highlighted the reason for the price target increase, noting the company's potential in securing contracts for co-located AI data centers in Alberta. The analyst pointed out that Capital Power is well-positioned to benefit from these opportunities, especially after the recent completion of the Genesee repowering project.
Capital Power's stock price target was revised upward by incorporating a higher target multiple. BMO Capital Markets has increased the target multiple to 10 times from the previous 9 times. This change reflects a more optimistic outlook on the company's growth prospects, particularly in the context of the evolving energy and technology landscapes in Alberta.
The updated target multiple is in line with that of Capital Power's closest peer, TransAlta (NYSE:TAC) Corporation (TA:CN), which currently has an Outperform rating and a stock price of Cdn$19.85. The comparison suggests a similar level of confidence in the market performance of both companies within the industry.
Investors and market watchers will likely monitor Capital Power's progress as it seeks to capitalize on the growing demand for AI data center infrastructures. The company's strategic position in Alberta's energy sector could play a crucial role in its ability to secure these potentially lucrative contracts.
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