Skip to main content

Market Overview

Macquarie Says InfraREIT Will Outperform On 'Simple' Story


In a report published Tuesday, Macquarie analyst Andrew Weisel initiated coverage of InfraREIT Inc (NYSE: HIFR) with an Outperform rating and a price target of $36.

InfraREIT expects to report 10 percent DPS growth per annum through FY18 from organic capex and another 5 percent from acquisitions from its parent company, Hunt Developer, or third parties.

"We conservatively project a 17% CAGR in cash available for distribution (CAFD), driving an 11% DPS CAGR after equity dilution, resulting from rate base growth that's among the fastest in the utility sector and sustainable beyond '18," analyst Andrew Weisel mentioned.

A potential acquisition of Oncor by Hunt could boost InfraREIT's growth significantly. "Though all eyes are on Oncor, we argue that Hunt development projects not yet on the ROFO list could take its place," Weisel added.

In the report Macquarie noted, "HIFR's current yield is notably below average at 2.9% vs regulated utilities at 4.0%, REITs at 4.2%, yield cos at 5.3%, and MLPs at 6.0%. Moreover, taxation is unfavorable for HIFR as a REIT: the after-tax yield is 1.6% vs 3.0% for utilities. On the flip side, this means a lower cost of equity, which supports growth from M&A."

Weisel expressed skepticism regarding the company's REIT structure being fully proven, even in Texas. "We believe that, after the next rate case, the PUCT may support a sharing mechanism between InfraREIT and ratepayers. Outside of TX is even dicier," the report added.

Latest Ratings for HIFR

Oct 2018Wells FargoMaintainsMarket PerformMarket Perform
Apr 2018Wells FargoDowngradesOutperformMarket Perform
Jan 2017RBC CapitalDowngradesOutperformSector Perform

View More Analyst Ratings for HIFR
View the Latest Analyst Ratings


Related Articles (HIFR)

View Comments and Join the Discussion!

Posted-In: MacquarieAnalyst Color Initiation Analyst Ratings

Latest Ratings

EVHCanaccord GenuityMaintains24.0
BMRNCanaccord GenuityMaintains91.0
ONTFCanaccord GenuityInitiates Coverage On65.0
MTZCredit SuisseMaintains114.0
APPSRoth CapitalMaintains100.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at