Is Polaris Renewable Energy still a buy?

Beacon Securities analyst Kirk Wilson says Polaris Renewable Energy (Polaris Renewable Energy Stock Quote, Chart, News, Analysts, Financials TSX:PIF) delivered a softer-than-expected third quarter due to weaker solar output in the Dominican Republic and Panama and unfavourable wind conditions at its Punta Lima project in Puerto Rico.

Strong hydro performance in Peru and Ecuador offset most of the shortfall.

Wilson noted that total generation of 181.2 GWh was 2% below forecast, though still up 7% year-over-year on the contribution from Puerto Rico and improved hydrology in Peru and Ecuador.

He maintained a “Buy” rating and $22.00 target, saying visibility into a meaningful EBITDA lift through 2027 is improving, anchored by the pending battery storage project in Puerto Rico.

Toronto-based Polaris focuses on the acquisition, development and operation of renewable energy assets in Latin America, with geothermal, solar, wind and hydro projects across Nicaragua, Peru, the Dominican Republic, Ecuador and Panama.

Looking to Q4/25, management indicated October trends are similar to Q3, with strong rainfall in Peru and Ecuador and softer solar conditions in the Dominican Republic and Panama. A major maintenance outage at San Jacinto in Nicaragua has been deferred to Q1/26, allowing the geothermal plant to run at ~50 MW through Q4. Polaris guided to 195–200 GWh of generation for the quarter.

Given long-term PPAs across the portfolio, the production miss largely flowed through to financials. Revenue came in 3% below expectations at US$19.0-million, while EBITDA of US$12.8-million missed Wilson’s US$13.3-million forecast. The EBITDA margin fell to its lowest level in several years: 67.1%, reflecting a higher contribution from lower-margin Peru assets. Wilson expects margins to rebound above 70% in Q4 with improved generation.

Final approval for the US$70-million (US$50-million post-ITC) 71.4 MW battery energy storage system (BESS) in Puerto Rico is now expected within 60 days, slightly later than hoped, but Wilson sees minimal approval risk. The project could add US$13–14-million in annual EBITDA, with start-up expected in late 2026.

While Q3 was modestly light, Wilson said the BESS project provides “growing clarity of a significant boost to EBITDA into 2027,” potentially lifting annual EBITDA to over US$70-million. He added that Polaris has identified additional organic and inorganic opportunities that could further extend growth.

Wilson said Polaris should generate US$57.7-million in Adjusted EBITDA on US$80.5-million of revenue in fiscal 2025, improving to US$58.8-million on US$83.3-million in 2026.

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