09:46 AM EDT, 07/20/2022 (MT Newswires) -- Tudor, Pickering, Holt on Wednesday reiterated its buy rating on the units of Brookfield Renewable Partners L.P (BEP-UN.TO, BEP) with a US$41.00 price target as it previewed the company's second-quarter results.
"We are modeling in-line Q2 Prop. Adj. EBITDA of $558MM and FFO/sh of $0.48, though results are expected to be stronger y/y due to higher generation volumes, increased realized pricing on the back of inflation escalators, and new solar growth projects," analyst Matthew Taylor noted. "Hydro tailwinds should be a focus again including messaging around re-contracting upside in both H2'22 and over the next five years - this partly explains our higher EBITDA estimates versus the Street in both 2022 and 2023 of +4% and +3%, respectively. Macro uncertainty will drive interest on potential impacts to the cadence of development and realized returns, but we see the company's scale, diversification, predominately fixed-rate debt, and inflation indexation largely mitigating headwinds faced by other developers. We model a 5-year FFO/sh CAGR of ~12%, which is in-line with the company's upsized guidance of 10+% per annum over the medium-term (vs run-rate guidance of 6-11%). Business tailwinds from higher power prices and demand for grid reliability (i.e., hydro) should backstop the company's near-term cash flows while the longer-term opportunity still screens attractively as countries re-tool power stacks to diversify away from Russian gas. Maintain Buy."