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UBS: SunEdison 'Poised To Perform'

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In a report published Monday, UBS analysts maintained a Buy rating on SunEdison Inc (NYSE: SUNE), with a price target of $32.

There are a variety of datapoints that could "drive shares upwards in coming weeks," after the company's latest convert offering. The analysts expect SunEdison to announce its Warehouse V2.0 for existing assets. The announcement will preliminarily include the Atlantic Power Corp (NYSE: AT) acquisition as the company's inaugural portfolio, "at $515 Mn of acquisition EV."

In the report UBS noted, "We understand $100 Mn of the initial recent SUNE convert deal is earmarked as an equity contribution into the structure, with a further outside investor (seemingly a pension/infra fund) poised to fund the balance of the facility. We understand the structure would target ~1/3rd equity, 2/3rds debt capitalization, with a targeted total size of ~$2 Bn."

The upcoming partnerships could involve an agreement with Dominion Resources, Inc. (NYSE: D).

The analysts commented, "We see a clear opportunity for SUNE to expand into both Canadian renewable projects given its limited exposure to date, as well as potentially leverage the lower valuations for YieldCo-like assets to engage in future M&A."

While private transactions remain the main focus, there could be corporate mergers or further asset sales. "We suggest investors should keep Canadian YieldCos on their radar," the report said.

The analysts expect SunEdison to pursue a dividend since the company continues to "redefine its value proposition to more closely mirror a conventional general partner structure."

Latest Ratings for SUNE

DateFirmActionFromTo
Mar 2016Stifel NicolausTerminatesHold
Mar 2016Axiom CapitalMaintainsSell
Mar 2016Avondale PartnersDowngradesMarket OutperformMarket Perform

View More Analyst Ratings for SUNE
View the Latest Analyst Ratings

 

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