Baird Initiates TerraForm Power With Outperform

In a report published Wednesday, Baird analysts initiated coverage of

with an Outperform rating and a price target of $45. TerraForm Power, owner of several renewable energy projects, is poised for robust growth driven by the large development pipeline of its sponsor

. The company is also expanding through third party acquisitions. "We believe TERP provides a lower-risk investment opportunity for investors looking to invest in renewable energy projects. TERP's portfolio is comprised of projects with long-term contracts in place, counterparties with high credit ratings (A-average), diversified assets (including solar and wind projects), and low asset ages," the analysts mentioned. The company is poised to meet its near-term targets, backed by its high quality asset portfolio and a strong pipeline of projects. "The company's targeted dividend CAGR of >24% (since IPO) should reward shareholders over the intermediate term," the analysts added. TerraForm has raised its annual dividend guidance from ~$0.90 per share at its IPO to ~$1.35 per share as of May 7. The company has also set out dividend targets of $1.53 per share for 2016, $1.90 per share for 2017 and $2.28 per share for 2018. In the report, Baird noted, "Given TERP's expect portfolio growth, we believe its dividend targets are achievable, which should reward long-term shareholders."