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Pattern Energy Group Inc. (PEGI)

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GS had this on the 5th

Pattern Energy Group Inc (NASDAQ: PEGI), a power company that focuses on wind, solar and transmission projects in the U.S., has underperformed recently, offering investors an entry point, according to Goldman Sachs.

The Analyst

Goldman Sachs analyst Brian Lee upgraded shares from Neutral to Buy, with a 12-month price target of $25, suggesting a 22 percent return potential compared to the 11 percent average return of the firm's coverage universe.

The Thesis

A combination of lower wind production, equity issuance and U.S. tax reform concerns have pressured the shares of Pattern Energy in recent months, Lee said in a note. Given the view these headwinds are transitory in nature, the analyst sees a setup for easier comps and mean revision potential, with respect to weather-impacted production levels.

This, according to Lee, argues for a favorable risk/reward.

Pattern Energy is now one of the highest-yielding YieldCos at about 8 percent on 2018 estimates compared to 6.5 percent for peers, Goldman said. The firm believes execution on dropdowns and organic cost improvements would support 20 percent cash available for distribution, or CAFD, in 2018-19, and an improvement in payout ratio back down to 85-90 percent.

Goldman sees the returning of fourth quarter wind production to average, dropdowns and lower payout ratio, organic cost savings and liquidity as upcoming catalysts.

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Good to hear Goldman thinks the tax issue is a temporary headwind.

Headline news at the NYT is that they have put together a combo House/Senate bill now.  Any word on what has happened to the PTC / ITC / AMT / and BEAT?

 

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1 hour ago, sunnypease said:

Good to hear Goldman thinks the tax issue is a temporary headwind.

Headline news at the NYT is that they have put together a combo House/Senate bill now.  Any word on what has happened to the PTC / ITC / AMT / and BEAT?

 

https://www.vox.com/energy-and-environment/2017/12/13/16768074/tax-bill-renewable-energy-wind-solar-credits

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This is strange folks. Why is PEGI selling off & the solars & CAFD & RUN are not selling off?

Some wind specific bad news?

 

 

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You need to look at NEP and other yieldcos they are the same and NEP is up. I think some momentum selling got better of the stock. 

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