Renewable Power SectorAccording to TD Equity Research:
Share prices of renewable independent power producer (IPP) equities have underperformed broader indices in recent months. We believe that this shareprice weakness reflects investor concerns that include, but are not limited to, funding platforms and narrowing return premiums, which threaten to undermine per-share growth metrics. Since the end of March, share prices of Canadian renewable IPPs have declined by 8%, on average. This compares with a 4% average decline for large-cap Canada-listed utilities. TransAlta Renewables was the only renewable IPP in our coverage universe with a positive share-price performance over this period, following the July 11 announcement of its planned acquisition by TransAlta Corp. Our recommendations are unchanged, but we are lowering our target prices for all renewable IPPs within our coverage universe. We believe that ongoing momentum for renewable power development and the group's defensive attributes should still support valuations. Our top pick in the sector is Brookfield Renewable.