Firm expands its list for the second half of the year
Mr. Merer forecasts FFO per unit will rise to $1.71 in 2023, up from $1.56 in 2022, and expand to $1.89 in 2024 driven by both acquisition and organic growth.
“On its Q2 [second quarter] conference call, management highlighted that M&A [merger and acquisition] conditions are tilting towards a buyer’s market, which could create opportunities for BEP to buy operating assets or look at public-to-private transactions, but limit its pace of asset sell-downs in the back half of the year,” he said.
“For the year, BEP expects to commission [approximately] 5 GW [gigawatts] of new capacity which should contribute [roughly] $70 million per year to FFO. In Q2, BEP highlighted an additional [roughly] 19 GW of capacity in its advanced stage pipeline that, combined with its sustainable solutions pipeline could add another $245 million in run-rate FFO.”Analyst Endri Leno has an “outperform” recommendation and target price of $12.50, implying the unit price may rally 50 per cent.
The analyst highlighted five attractive characteristics for the Fund: “1) exposure to stable end markets that reduces economic cyclicality; 2) tailwinds from the U.S. repatriation of advanced semi-conductor chip manufacturing; 3) an elevated distributable cash yield; 4) a healthy and well-covered monthly distribution; and 5) an inexpensive valuation.”
The analyst’s adjusted earnings before interest, taxes, depreciation and amortization forecasts are $450.5-million in 2023, up from $430.9-million in 2022, retreating to $420 million in 2024.
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