Roth Capital Starts 8point3 At Buy, Expecting Premium Valuation And Dividend Growth

In a report published Wednesday, Roth Capital analyst Philip Shen initiated coverage of

with a Buy rating and $21 price target. The analyst believes that the company is among the "highest quality yieldcos" and that the stock deserves to trade at a premium to peers. Given that 8Point3 Energy is sponsored by

and

, the analyst believes that it is the "only pure solar yieldco" and one of the best pipelines and asset portfolios. The analyst expects the stock to see relative multiple expansion going forward, as 8Point3 Energy realizes the benefits of its joint sponsorship, which offers significant competitive advantage to the company. In addition, the analyst believes that dividend growth of 12-15 percent would be achievable for the company, given its initial portfolio, as well as its ROFO asset of 1.1GW. "We forecast 8point3 to generate $79mn and $142mn of CAFD in 2016 and 2017, respectively, resulting in 224 percent and 80 percent year on year growth. We forecast the sponsor IDRs not to kick in until 2018," Shen stated.