The Largest U.S. Wind Blade Company, TPI Composites, Initiated Bullish

Morgan Stanley’s Stephen C. Byrd believes TPI Composites Inc TPIC's “contracted cash flows, limited competition and ability to grow as wind demand and blade outsourcing grows provide a compelling way to play growth in the global wind market.”

Byrd initiated coverage of the company with an Overweight rating and price target of $21.

Well Positioned

The analyst mentioned that the growing trend toward greater blade outsourcing and the persisting wind power demand growth have positioned TPI Composites for robust revenue growth.

In addition, the company has only one outsourcing competitor that has the global capabilities and scale of TPI Composites, while there are meaningful barriers to entry.

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Byrd also pointed out that the company offers attractive returns on invested capital, “driven by capital-light business model, significant benefits of scale and track record of efficient operations.”

Differentiated Company

Furthermore, its long-term supply agreement with several leading wind turbine OEMs that currently generate up to $3.1 billion in revenue and offer material incentives for customer maximize blade volumes.

Byrd believes what differentiates the company is its expertise “in advanced composite technology, manufacturing capabilities and track record, global presence, and its collaborative approach in which TPIC dedicates capacity to build its customers' unique blades.”

Full ratings data available on Benzinga Pro.