Canadian Hydro Developers "buy," target price raised

03/23/06 - Canaccord Adams

NEW YORK, March 23 (newratings.com) - Analyst Mark Thompson of Canaccord Adams maintains his "buy" rating on Canadian Hydro Developers (KHD.TOR). The target price has been raised from C$6.55 to C$6.60.

In a research note published this morning, the analyst mentions that the price of the Standard Offer Program (SOP) announced by Ontario’s Ministry of Energy is significantly higher than was expected. Canadian Hydro Developers’ 3.2 MW Misema hydro plant is currently receiving about C$50 per MWh on sales to the spot market, the analyst says. The SOP is expected to add about C$827,000 in net cash in the first year, Canaccord Adams adds. Since costs at the plant are fixed, the revenue addition on account of the SOP would have a significant impact on the company’s profits, the analyst points out.