In a report released yesterday, Benjamin Pham from BMO Capital maintained a Hold rating on Hydro One, with a price target of C$50.00.
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Benjamin Pham has given his Hold rating due to a combination of factors that reflect both the strengths and challenges facing Hydro One. The company’s recent earnings report showed a strong performance with a notable year-over-year increase in earnings per share, supported by volume growth and effective cost management. This positive trend is expected to continue, bolstered by new transmission projects and rising energy demand in Ontario.
However, despite these promising developments, Pham maintains a Hold rating primarily due to valuation concerns. Hydro One’s stock is trading at a significant premium compared to its peers, which tempers the enthusiasm for a more aggressive rating. Additionally, while the company can self-fund its growth through 2027, there is an anticipated need for equity beyond that period, which introduces some uncertainty. These factors, combined with the regulatory environment and potential competitive pressures, contribute to the decision to rate the stock as Hold.
H’s price has also changed moderately for the past six months – from C$45.090 to C$50.410, which is a 11.80% increase.