Algonquin Power: Solid 2025 Execution Offsets Weaker Long-Term Outlook, Justifying a Hold Rating

In a report released yesterday, Benjamin Pham from BMO Capital maintained a Hold rating on Algonquin Power & Utilities, with a price target of $6.50.

Benjamin Pham has given his Hold rating due to a combination of factors, including Algonquin’s clear operational progress in 2025 and the offsetting impact of weaker longer-term guidance. The company delivered solid Q4 and full-year 2025 results, with earnings surpassing both guidance and expectations, aided by lower operating costs, improved returns on equity, and a stronger balance sheet, all of which validate management’s Back to Basics Strategy.

At the same time, the roughly 9% cut to 2027 EPS guidance, mainly from a higher expected tax rate and delayed benefits from gas efficiency initiatives, has undermined some of that momentum and led to a sharp negative share price reaction. With management still evaluating tax optimization that is unlikely to materially help before 2027, and projected rate base growth of 5–6% viewed as steady but not exceptional, Pham sees the risk/reward as fairly balanced and thus maintains a Market Perform (Hold) stance despite a constructive long-term bias.

In another report released today, RBC Capital also maintained a Hold rating on the stock with a $6.50 price target.