M Partners John Safrance: Not much upside in Innergex Renewable for 2012

Longueuil, Quebec’s Innergex Renewable Energy (TSX:INE), which was founded back in 1990 but IPO’d in 2007, already knows better than most that the market can be fickle.

After debuting at $11 a share, the cleantech offering almost immediately rose to $14. But the seemingly inevitable losses that saddle many with expansionary ambitions in the space happened smack in the middle of the worst recession of a generation, and investors had little patience for the than $48 million, or $.94 cents a share the company lost in in 2008. Share of Innergex plummeted to less than three dollars.

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After 2009, however, the company began to hit its stride, beginning an ramp up in operations to today’s level of twenty run-of-river power plants and five wind farms, for a total net installed capacity of 461 megawatss; enough energy to power a small city. Innergex’s fiscal 2009 revenue of $58.6 million was a quantum leap over 2008’s $7.2 million, and the company returned a solid profit of $28.5 million, or $.61 cents a share.

Innergex’s stock responded to the snapback in its business fortunes, climbing to over the $10 mark, where it has remained since mid-way through 2010. So is there another level for Innergex to be had in 2012? Probably not, says M Partners Clean Technology & Infrastructure analyst John Safrance.

In a recent research update Safrance says “Innergex’s power producing and development pipeline assets (and associated Power of Purchase Agreements) are solid but the stock looks priced for perfection.” While, argues Safrance, Innergex deserves a premium from the market, he believes it is already baked into the current share price. Most investors, he says, will probably hold the stock for its healthy 5.7% dividend yield.

With seemingly no catalysts on the horizon, Safrance has a HOLD on Innergex Renewable, with a twelve month target price of $9.45.

At press time, shares of Innergex Renewable were down 0.6% to $10.18.

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