On Wednesday, BofA Securities updated its outlook on Hannon Armstrong (NYSE:HASI) Sustainable Infrastructure Capital Inc (NYSE:HASI), increasing the price target from $27.00 to $31.00 and maintaining a Buy rating on the stock. The adjustment comes in response to the company's management providing guidance for an 8-10% annual EPS growth for the fiscal years 2024 through 2026.
The firm's analyst has revised the distributable EPS estimates for Hannon Armstrong to $2.45 for FY24, $2.69 for FY25, and $2.86 for FY26. These figures suggest a compound annual growth rate (CAGR) of 8.7% through FY26. The updated estimates slightly diverge from the current consensus, being 1% higher for FY24, 3% higher for FY25, and 1% lower for FY26.
The projections for Hannon Armstrong's portfolio originations anticipate a stable period from 2023 to 2024, followed by a resumption of growth at 5% in FY25 and 10% in FY26. The company is expected to retain $1.7 to $2 billion per year in its portfolio, with 25% securitized. Despite a forecast of no growth in FY24 originations compared to the 28% growth in FY23, portfolio growth is expected to reach 22% versus the 44% seen in FY23, leading to a 10% EPS growth compared to the 7% in FY23.
The report suggests that even with flat originations and a slowdown in portfolio growth, an increase in EPS growth is anticipated due to higher portfolio yields. Investment yields are expected to approach or exceed 10%, which bolsters confidence in the company's targets. The analyst predicts an overall portfolio yield of approximately 8-9% over the period, with the spread holding steady at 4-5%.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.