Q: Since announcing Baltic Power and Hai Long off shore wind projects committing $10.2 total credit financing in mid September, this stock is down another 20%. Have they bit off more than they can chew creating another AQN situation? Do you recommend selling at this point?
5i Research Answer:
Utility investors are very concerned about debt levels these days, and NPI was already highly leveraged. EPS is expected to grow 30% in 2024, but even then it will still be below levels of 2019, 2020, and 2022. The stock has been a big underperformer and will likely see year end selling pressure. An equity issue is not out of the question here, either. While the stock could see a nice bounce when interest rates peak, the same can be said for all utilities. We would be fine moving on and shifting funds to BEPC or FTS or H.