UPDATE: Morgan Stanley Initiates Coverage on Pattern Energy on Solid Assets with Strong Growth

In a report published Wednesday, Morgan Stanley analyst Stephen C. Byrd initiated coverage on

with an Overweight rating and $26.50 price target. In the report, Morgan Stanley noted, “We expect YieldCos like Pattern to be profitable consolidators in the power industry. Pattern's strong growth profile, contracted power sales and relatively high payout ratio translate to attractive total returns and valuation, and a strong currency for project development and acquisitions. We forecast PEGI will generate a 2014 dividend per share of $1.37 ($49m in total), with a run-rate distributable cash flow in 2014 of $80m. We expect the dividend per share to grow at 11% per year on average through 2016.” Pattern Energy Group closed on Tuesday at $23.14.