CIBC UpgradeBrookfield Renewable Partners LP
We increase our price target to US$41 (previously US$40) following minor forecast updates and a roll forward of our valuation. We value Brookfield Renewable based on a risk-adjusted DCF valuation. We value the current operations and identified, contracted development projects and assign value for potential future growth related to TAM capture based on our expectations of the company’s market share and return potential. For the terminal values, we use EV/EBITDA multiples of 18.0x for the hydro assets and 11.1x for wind and solar (reflecting growth upside and value from asset recycling) applied against our year-10 estimates.
Upside Scenario: US$58 (Previously US$57). Assumes a terminal multiple of 17.0x and a discount rate of 3.6%, reflecting new contracts and M&A.
Downside Scenario: US$20 (Unchanged). Assumes a terminal multiple of 11.3x and a discount rate of 5.3%, reflecting more modest growth and market valuation