On Monday, BofA Securities began coverage on shares of Hannon Armstrong (NYSE:HASI) Sustainable Infrastructure Capital, Inc. (NYSE:HASI), a company that focuses on financing projects aimed at reducing carbon emissions. The firm assigned a Buy rating to the stock, along with a price target of $40.00, suggesting a 38% potential upside from the current levels.
The new coverage highlights Hannon Armstrong's role in partnering with leading developers to support decarbonization efforts across various sectors, including solar, wind, energy storage, energy efficiency, and renewable natural gas (RNG). BofA Securities pointed out that the company's project pipeline has more than doubled since 2020, now standing at $5.5 billion.
This growth indicates strong visibility for Hannon Armstrong, with approximately 40% of the pipeline expected to convert into transactions. Notably, around 80% of these transactions are anticipated to generate recurring revenue through the company's balance sheet.
The analyst from BofA Securities remarked on the company's established position within the market, noting that Hannon Armstrong has successfully created a defensible competitive niche. This strategic positioning is seen as providing a buffer against potential policy risks and market volatility. The endorsement reflects confidence in Hannon Armstrong's business model and its prospects for continued growth within the sustainable infrastructure finance sector.
Hannon Armstrong's commitment to financing decarbonization projects aligns with the increasing global focus on sustainability and the transition to a low-carbon economy. The company's robust pipeline and recurring revenue model present a positive outlook for investors looking for exposure to the green finance space. The Buy rating from BofA Securities underscores the firm's belief in the strength and resilience of Hannon Armstrong's business in the face of external challenges.
In other recent news, Hannon Armstrong Sustainable Infrastructure Capital Inc. reported significant financial growth in the third quarter of 2024. The company's adjusted earnings per share (EPS) increased by 8% compared to the same period last year. New investments for the company totaled $1.7 billion year-to-date, with managed assets growing 14% to over $13 billion. Despite a reported GAAP loss due to mark-to-market impacts from power contracts, the company maintains a strong liquidity position at $1.3 billion and a well-managed debt-to-equity ratio of 1.8 times.
RBC Capital Markets adjusted its price target on shares of Hannon Armstrong to $40.00, a slight decrease from the previous target of $41.00, but maintained an Outperform rating on the stock. This followed Hannon Armstrong's third-quarter results, which did not meet RBC Capital's expectations. The firm noted the resilience of Hannon Armstrong's business model and its capacity to deliver consistent returns across various market cycles and political landscapes.
In other updates, Hannon Armstrong is preparing to refinance its 2026 and 2027 bonds, leveraging its investment-grade status. The company is targeting an annual adjusted EPS growth of 8% to 10% through 2026 and sees the Renewable Natural Gas (RNG) market as a significant growth area.
InvestingPro Insights
Adding to BofA Securities' optimistic outlook on Hannon Armstrong Sustainable Infrastructure Capital, Inc. (NYSE:HASI), recent data from InvestingPro provides further context for investors. The company's market capitalization stands at $3.48 billion, with a P/E ratio of 15.17, suggesting a relatively modest valuation compared to some growth stocks in the green energy sector.
InvestingPro Tips highlight HASI's commitment to shareholder returns, noting that the company has raised its dividend for 6 consecutive years and maintained payments for 12 years. This track record of consistent dividends, coupled with a current dividend yield of 5.72%, may appeal to income-focused investors looking for stability in the renewable energy space.
The company's financial health appears solid, with InvestingPro data showing that liquid assets exceed short-term obligations. This financial flexibility could support HASI's ability to fund new projects and capitalize on the growing pipeline mentioned in the BofA Securities report.
While the stock has experienced volatility, with a 15% decline over the past month, the longer-term picture shows a 30.73% total return over the past year. This aligns with the analyst's view of HASI's resilience in the face of market fluctuations.
For investors seeking a deeper dive into HASI's prospects, InvestingPro offers 8 additional tips, providing a more comprehensive analysis of the company's strengths and potential challenges in the evolving sustainable infrastructure landscape.
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