Wells Fargo Wells Fargo analyst Jonathan Reeder cut his target for Brookfield Renewable Corp. to US$43 from US$50 with an “overweight” rating and Brookfield Renewable Partners LP (BEP-N, BEP.UN-T) to US$40 from US$46 also with an “overweight” recommendation. The averages are US$45 and US$40.96, respectively.
“We reiterate our Overweight ratings on units of BEP and shares of BEPC following a thorough scrub of our model assumptions following BEP’s YE’21 report,” he said. “While our modifications resulted in some near-term upside to our FFO estimates, our outer-year estimates did not change. We continue to be attracted to Brookfield Renewable’s long-term global decarbonization-levered growth prospects and view recent underperformance as providing an attractive entry point for longer-term investors, particularly those with ESG mandates. That said, in the nearer-term, BEP unit and BEPC share price performance many be driven more by macro factors, namely interest rate concerns. We lower our 12-18 month DDM-based price targets down to $40/unit from $46 for BEP and $43/share from $50 for BEPC. Key changes to our DDM assumptions include (1) extending 5-per-cent annual distribution growth assumption out through ‘25 and (2) increasing our discount rate to 8 per cent vs. 7 per cent previously.”