In response to recent share price depreciation, Credit Suisse analyst Andrew Kuske upgraded Brookfield Renewable Partners LP to “outperform” from “neutral,” calling it “a best in class developer of long-dated renewable power, an active capital recycler and a savvy purchaser of distressed assets.”
“Brookfield Renewable Partners LP (BEP) delivered lackluster stock market performance with declines of almost 6 per cent over the last month and 13 per cent for the year-to-date,” he said. “In our view, the recent pullback in BEP’s units looks to be largely related to a Russell Index Rebalance that negatively impacted Brookfield Renewable Corporation’s (BEPC) ‘paired’ security value. In our view, BEP is rather uniquely positioned versus many major renewable power stocks with a global platform, a robust and flexible funding model (Brookfield Group related) and a legacy skew towards higher value hydroelectric generation at the core of the asset base.”
Mr. Kuske maintained a US$45 target for its shares, which tops the current average of US$43.28.
“Accelerating the capital allocated to BEP’s development pipeline would likely aid valuation to a greater extent,” the analyst said. “Given Brookfield’s fund model and energy transition funds, BEP is in an enviable position to potentially accelerate growth not embedded in our current financial estimates. This pace of predictable growth is likely to be supplemented by a variety of M&A activities as witnessed in the past. Consistent with our approach across the coverage universe, we do not ascribe value to potential deal flow.”