On Thursday, JPMorgan made a bullish move on Brookfield Renewable Corp . (NYSE:BEPC), upgrading the stock's rating from Neutral to Overweight. The financial institution also increased the price target for the company's shares to $34.00, up from the previous target of $32.00. This adjustment reflects the firm's confidence in the company's prospects.
According to InvestingPro data, BEPC, currently trading at $29.89, has shown strong momentum with an 18% return over the past year. Analyst targets now range from $31 to $36, suggesting potential upside.
The rationale behind the upgrade is tied to Brookfield Renewable's substantial scale and diversification, which JPMorgan believes offers a "relative safe haven in the sector." With a market capitalization of $11.15 billion and revenue growth of 18.32% in the last twelve months, the company has demonstrated its market presence.
The analyst pointed out that there is a strong demand for de-risked, operational assets from organizations with access to low-cost capital. This demand supports Brookfield Renewable's expectation that capital recycling in the fiscal year 2024 could reach unprecedented levels.
Brookfield Renewable has had a significant year for asset sales, with year-to-date transactions totaling $2.3 billion, of which $1 billion is net to Brookfield Renewable Partners (NYSE:BEP). These figures underscore the company's effective strategy in asset management and capital allocation.
Furthermore, JPMorgan emphasizes Brookfield Renewable's leading access to capital, which is anticipated to continue enabling the acquisition of high-quality businesses and projects that are currently lacking growth capital. This strategic advantage is expected to contribute to the company's growth and profitability. InvestingPro subscribers can access additional insights through comprehensive Pro Research Reports, which reveal crucial metrics and expert analysis for informed investment decisions.
In addition to the upgraded outlook and price target for Brookfield Renewable Corp., JPMorgan also set a year-end 2025 price target for Brookfield Renewable Partners at $30.00. The analyst suggests that as a dividend-paying entity, Brookfield Renewable could benefit in fiscal year 2025 from the forecasted lower interest rates, which typically enhance the attractiveness of dividend stocks.
The company currently offers a 4.75% dividend yield and has maintained dividend growth for five consecutive years, according to InvestingPro data. This forward-looking statement about interest rates and dividends provides an additional layer of context for the upgrade and price target revision.
In other recent news, Brookfield Renewable reported a record funds from operations (FFO) of $278 million, or $0.42 per unit, in Q3 2024, marking an 11% increase from the previous year. These results are largely due to strategic asset development, acquisitions, and strong pricing, such as the sale of a 25% stake in First Hydro and a 50% stake in Shepherds Flat wind portfolio.
Additionally, Brookfield Renewable is on track to meet its target of over 10% FFO per unit growth for the year. The company's asset monetizations have generated approximately $2.3 billion, with returns of 2.5 times invested capital and internal rates of return exceeding 20%.
Over $11 billion of equity has been committed to growth initiatives, including the acquisition of Neoen (EPA:NEOEN). Despite potential market volatility and regulatory changes, Brookfield Renewable maintains a positive outlook for continued growth, backed by its available liquidity of $4.6 billion and plans for $30 billion in financing this year.
These recent developments underscore the company's financial strength and strategic positioning in the renewable energy market.
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