This Analyst Says It's Time To Take Profits From TerraForm Power, Downgrades Stock

The recent rally in TerraForm Power Inc’s TERP shares seems justified and the risk-reward now seems approximately balanced, according to JPMorgan.

The Analyst

JPMorgan’s Mark Strouse downgraded TerraForm Power from Overweight to Neutral leaving the price target at $17.

The Thesis

TerraForm Power’s shares have surged 57% year-to-date, outperforming the 20% rise in S&P500 and the 29% appreciation in its YieldCo peers, Strouse said in the downgrade note.

He added that the rally seems justified, given the company’s solid execution of growth and cost savings initiatives. The analyst said, however, that the stock had climbed beyond their current price target, which warrants the downgrade.

Strouse left the estimates unchanged. The estimates for dividends per share (DPS) are at 81 cents for fiscal 2019 and at 85 cents for fiscal 2020, which are in-line with the company’s long-term target of 5-8% growth.

“We look for pullbacks or stronger than expected DPS growth as opportunities to potentially get more constructive,” Strouse write in the note.

Price Action

Shares of TerraForm Power were down 1.42% to $17.33 at the time of publishing.

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Posted In: JP MorganMark StrouseAnalyst ColorDowngradesAnalyst Ratings