Polaris Renewable Energy is a buy, this analyst says

Polaris Renewable Energy (Polaris Renewable Energy Stock Quote, Chart, News, Analysts, Financials TSX:PIF) continues to see strong potential to build on its Puerto Rico acquisition and the operational momentum across its Latin American portfolio.

Beacon Securities analyst Kirk Wilson said in a May 1 investor note that any future acquisition, whether operating assets or another BESS project in the Dominican Republic or Puerto Rico, will likely be financed through its existing bonds or by increasing the bond size.

Wilson maintained his Buy rating and $22.00 target.

Polaris is focused on acquiring, developing, and operating renewable energy in Latin America through projects in Nicaragua, Peru, the Dominican Republic, Ecuador, and Panama. Its head office is in Toronto.

Polaris reported its Q1 2025 results with revenue of $20.3-million, matching expectations, and EBITDA of $15.0-million, just 1% below forecasts. The results were boosted by intense rainfall that helped hydro projects in Ecuador and Peru. This was also the first quarter to include contributions from the Punta Lima wind farm in Puerto Rico, though only for 28 days.

“Power production of 216.3 GWh in the quarter compared to our forecast of 210.8 GWh and was up 1% Y/Y,” Wilson said. “A strong rainy season in Ecuador delivered the best Q1 in a number of years in that country, whereas increased rainfall in Peru was both a blessing and a curse. Production was up at the Canchayllo facility, although 8 de Agosto had operations interrupted due to concerns about damage from debris/rocks during the runoff.

“Somewhat offsetting the strong performance from hydro was reduced output in Nicaragua (due to the Binary unit running below max output) and Panama (downtime from some inverter replacements). Both Nicaragua and Panama are back to normal operations in Q2.”

Wilson said that Polaris will see $59.4-million in Adjusted EBITDA on revenue of $82.8-million in fiscal 2025. he thinks those numbers will improve to $63.5-million on revenue of $88.1-million in fiscal 2026.

Wilson said Polaris may soon follow up its Puerto Rico wind project with a battery storage installation. With Punta Lima now in the portfolio, the company is eyeing an 80 MW lithium battery system and expects to sign a deal by late Q2. The project is estimated to cost US$70-million, offset by a US$20-million investment tax credit, and could generate about US$15-million in annual EBITDA. If signed, the battery system would likely be up and running in the second half of 2026.

However, while the project economics appear promising, Wilson flagged one potential challenge that could impact its feasibility.

“A potential wrench in the BESS project could be tariffs on the equipment that would come from China,” he said. “PIF estimates this would account for about 70% of project cost. Possible tariffs could reach 100% or more; however, PIF still models this project as economic under that scenario especially if the company can get a pass-thru clause included in the deal.”

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