TransAlta Corp (TA:CA) (TAC)
Jefferies raised its12 month target price to C$27 from C$20, citing expectations that sustained strength in Alberta’s electricity prices will meaningfully enhance the company’s free cash flow generation and earnings outlook. Analysts believe that the recent tightening in Alberta’s power market, driven by growing demand, reduced reserve margins, and higher natural gas prices, creates a favorable environment for TransAlta’s diversified generation portfolio.
Jefferies highlighted that TransAlta’s strategic mix of hydroelectric, wind, and thermal generation assets provides both stability and leverage to elevated power prices, positioning the company to capture upside in a volatile energy pricing landscape. With increasing spot power prices and forward contracts trending above historical averages, analysts expect TransAlta’s merchant exposure to translate into stronger operating cash flows through 2025.
The firm also emphasized that higher cash generation should support accelerated deleveraging and capital returns, giving TransAlta greater flexibility to pursue growth initiatives, including renewable expansion and battery storage investments. Jefferies noted that the company’s ongoing transition toward cleaner energy sources—combined with prudent hedging and disciplined capital allocation—continues to enhance its long-term risk profile and earnings quality.
Additionally, the report pointed out that improving regulatory visibility in Alberta and the company’s efficiency initiatives could further strengthen margins and boost shareholder value. Jefferies believes that the market has not yet fully priced in TransAlta’s improved fundamentals, presenting potential for multiple expansion as investor sentiment toward Canadian power producers improves.
Overall, the higher price target reflects Jefferies’ confidence in TransAlta’s ability to capitalize on elevated power pricing trends, deliver robust free cash flow, and maintain a strong position in the evolving North American energy transition landscape.
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