On Monday, B.Riley increased the price target for Hannon Armstrong (NYSE:HASI) Sustainable Infrastructure Capital Inc (NYSE:HASI) to $44, up from the previous $41, while maintaining a Buy rating on the stock. The firm's analyst cites the company's promising position to continue expanding and sustain substantial spreads even in a high-interest-rate environment.
The analyst noted that Hannon Armstrong is a top pick for 2024, highlighting the potential for improved spreads on both the asset and debt sides. The company's management has issued a new three-year guidance, projecting an annual distributable EPS growth rate of 8%-10% from 2024 to 2026, based on the 2023 baseline of $2.23 per share. This guidance translates to an expected range of $2.40-2.45 for 2024, $2.60-2.69 for 2025, and $2.80-2.96 for 2026.
B.Riley expresses increased confidence in the management's execution and the company's recession-proof business model, which is supported by a growing opportunity pipeline. Hannon Armstrong has also taken steps to improve and strengthen its liquidity position through recent debt raises, which are anticipated to fund the majority of its portfolio growth for 2024.
In April 2024, the company announced it had extended and upsized its credit facilities with a banking syndicate to $1.625 billion. This includes an increase in committed capacity under HASI's CarbonCount-Based Revolving Credit Facility from $915 million to $1.25 billion, an outstanding amount under the CarbonCount-Based Term Loan Facility of $250 million, and an expansion of the CarbonCount Green Commercial Paper Note Program from $100 million to $125 million.
The analyst concludes that with robust liquidity, strong spreads, and increasing yields on the pipeline, coupled with solid portfolio performance, Hannon Armstrong's growth potential is promising. The current valuations are seen as an attractive entry point for long-term investors.
InvestingPro Insights
As Hannon Armstrong Sustainable Infrastructure Capital Inc (NYSE:HASI) continues to capture the attention of analysts and investors alike, insights from InvestingPro provide a more nuanced view of the company's financial health and stock performance. With a market capitalization of $2.83 billion and a price-to-earnings (P/E) ratio at 17, slightly adjusting to 19.13 for the last twelve months as of Q4 2023, HASI shows a stable valuation in the market. The PEG ratio for the same period stands at a remarkably low 0.09, suggesting potential undervaluation relative to earnings growth expectations.
InvestingPro Tips highlight that HASI has a track record of dividend reliability, having raised its dividend for 5 consecutive years and maintained payments for 12 consecutive years. This is a testament to the company's commitment to shareholder returns, which is further supported by a significant dividend yield of 6.65% as of the latest data. Additionally, the company's liquid assets exceed short-term obligations, providing financial flexibility and reducing liquidity risk.
For investors interested in deeper analysis and additional InvestingPro Tips, HASI's profile on InvestingPro includes more insights that could inform investment decisions. Subscribers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 9 more tips available, including analysts' predictions and stock price movement insights, InvestingPro offers a comprehensive look at HASI's financial landscape.
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