UPDATE: UBS Securities Initiates Coverage on NextEra Energy Partners LP with Neutral Rating, $34 PT as YieldCo is a Cut Above the Rest

In a report published Tuesday, UBS Securities analyst Julien Dumoulin-Smith initiated coverage on

with a Neutral rating and $34.00 price target. In the report, UBS Securities noted, “NextEra Energy Partners (NEP) has sprinted upwards from the start line, with a premier set of drop-downs as well as the most credible organic development efforts in the industry, justifying its premium valuation vs. peers. We see a medium-term pipeline of ‘YieldCo eligible' assets at the NEE level close to ~7GW. We see credibility to upwards of a ~2GW/yr pipeline of assets through the medium-term, enabling ~15% distribution growth through the 5-yr outlook. However, beyond this period it will need to rely upon thermal, electric transmission, and gas midstream asset drops to continue its 15% CAGR for ~2-3 years given the 50% splits with the GP.” NextEra Energy Partners LP closed on Monday at $34.52.