TransAlta (TAC) Stock Forecast & Price Target

TransAlta Corp is positioned for long-term cash flow improvement due to strong power prices, rising demand, supply volatility, and increasing carbon prices in Alberta. The company's hydro fleet not only provides clean energy but also supports ancillary services, contributing to incremental EBITDA growth and enhancing its exposure to the ongoing energy transition and rising electricity demand. Factors such as population and economic growth, along with the increasing electrification and demand from data centers, further bolster the favorable outlook for electricity demand in North America.

TransAlta Corp's recent financial performance indicates a concerning trend, particularly with the Wind and Solar segments, which consistently reported EBITDA that fell significantly short of forecasts. Additionally, projections have been revised downward, with anticipated power revenues expected to decline to $40/MWh, reflecting potential stagnation in electricity growth and highlighting vulnerabilities in revenue generation. Furthermore, the company's comparable EBITDA of $270 million for Q1/25 was below both internal forecasts and consensus estimates, suggesting ongoing operational challenges and financial pressures.