Barclays: Time To Buy Macquarie Infrastructure

In a report published Friday, Barclays analyst Richard Gross reinitiating coverage of

with an Overweight rating and a price target of $101. The acquisition of Bayonne Energy Center offers important advantages for Macquarie. Benefits from the acquisition include an increase in the dividend growth rate, cash flow quality improvement, extended cash tax shield and diversified growth opportunities. Macquarie's share price has surged 18.9 percent following the announcement of acquisition, despite which the analyst believes that the stock offers "a solid value proposition including a 3-year total return of at least 16.2 percent." Macquarie's growth prospects have become more diversified, with Bayonne Energy bringing in two well-defined opportunities. "The first opportunity is tied to 100 MW of additional generation capacity that MIC is developing on land directly adjacent to BEC. The second relates to an existing co-generation facility located within IMTT's footprint, and whose lease expires in 2018," Gross stated. Macquarie is expected to complete "bolt-on" acquisitions worth $100 million in 2015. "Combined with reinvigorated growth spending at IMTT and continued strong performance at Atlantic Aviation, we think MIC will comfortably be able to hit its guided dividend increase of 14 (percent per annum) through 2016," the Barclays report said. Having completed its conversion to a Corporation, the analyst expects Macquarie to be added to the Russell 1000 at the time of its annual reconstitution, which is likely to increase the demand for its shares.