Innergex is a buy at these levels, says Cantor Fitzgerald analyst Safrance

Cantor Fitzgerald analyst John Safrance says the completion of Innergex Renewable Energy’s (Innergex Renewable Energy Stock Quote, Chart, News: TSX:INE) acquisition of the 40.6MW Magpie hydro facility in Quebec removes a small amount of uncertainty about the deal, and underscores the value that Innergex is at these levels.

This morning, Innergex announced that the proposed pickup, which was originally announced twelve months ago, was completed. CEO Michel Letellier said the move will be a boost to the company’s hydro holdings.

“We are very pleased with the acquisition of Magpie, which further strengthens our presence in hydro with a new long-term facility and further diversifies our hydro operations,” he said. “We look forward to developing our relationship with a new partner, the Minganie regional county municipality.”

Safrance notes that Innergex is down significantly from its highs, a turn of events that prompted him to raise his rating on the company’s stock to BUY early last month. He says he continues to see value at these levels. In a research update to clients this morning, Safrance maintained his BUY rating on INE, but raised his price to $10.75 from $10.50.

Safrance notes that Innergex management also commented on the impact that higher long term interest rates would have on its business. As of the first quarter of this year, he points out, 95% of the company’s debt was fixed or fully hedged at rate changes that will have little impact. He says the internal rate of return of future projects may be impacted, but only modesty so.