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On Wednesday, RBC Capital Markets adjusted its price target on Hannon Armstrong (NYSE:HASI) Sustainable Infrastructure Capital Inc (NYSE:HASI), a company specializing in climate solutions investments. The firm decreased its target to $38.00, down from the previous $40.00, while maintaining an Outperform rating on the company's stock.
Currently trading at $27.44, HASI offers a notable 6.04% dividend yield and trades at a P/E ratio of 14.35x. According to InvestingPro analysis, the stock appears to be slightly undervalued based on its Fair Value metrics.
The adjustment by RBC Capital Markets reflects a cautious stance on near-term risks for Hannon Armstrong, citing potential impacts from high-interest rates and policy uncertainty. Analyst Christopher Dendrinos of RBC noted that these factors might affect the company's activities in the year 2025.
Despite these concerns, Dendrinos expressed optimism about Hannon Armstrong's growth opportunities and strong deal flow expected in the upcoming quarter. The company has demonstrated solid performance with 14.37% revenue growth over the last twelve months, though InvestingPro data indicates the stock's high volatility with a beta of 1.93.
The revised price target comes as RBC Capital anticipates a slower pace in the funding of CCH1 and other transactions, which could be delayed as developers navigate a landscape of rising interest rates and uncertain policy environments.
Nonetheless, Hannon Armstrong is seen to benefit from a second investment grade (IG) rating, which positively impacts interest rates. This advantage, however, may be counterbalanced by the current higher interest rates, with the 10-year treasury noted at approximately 4.68%, a 30 basis points increase compared to February 2024.
RBC Capital has also slightly reduced its earnings per share (EPS) estimate for Hannon Armstrong in 2025 to $2.62, which is about 1% below the consensus estimate of $2.64. This revision aligns with the firm's expectations of a potentially slower transaction timeline for the company's projects. Despite the lowered price target and EPS estimate, RBC Capital's Outperform rating indicates a continued positive outlook on Hannon Armstrong's stock performance.
In other recent news, Hannon Armstrong Sustainable Infrastructure Capital (HASI) has seen significant financial growth and strategic positioning. The company has reported an 8% increase in adjusted earnings per share in the third quarter of 2024 compared to the same period last year. New investments have totaled $1.7 billion year-to-date, and managed assets have grown by 14% to over $13 billion.
HASI has also launched a private add-on offering of 6.375% green senior unsecured notes due 2034, reflecting its strong financial health. Analyst firms like TD Cowen, BofA Securities, and RBC Capital Markets have expressed confidence in the company's growth trajectory. TD Cowen has even named HASI as its 2025 Best Idea due to its robust business model and appealing dividend yield of 6.24%.
Citi analyst Vikram Bagri has upgraded the rating for HASI from Neutral to Buy, setting a price target of $36.00. Bagri points to the company's strong financial position, robust balance sheets, and the growing demand for clean energy as factors contributing to this upgrade.
HASI is also preparing to refinance its 2026 and 2027 bonds, leveraging its investment-grade status. The company targets an annual adjusted EPS growth of 8% to 10% through 2026 and views the Renewable Natural Gas (RNG) market as a significant growth area. These developments highlight HASI's robust financial health and strategic positioning in the market.
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