Naji Baydoun of iA Capital Markets likes the new acquisition by clean power company Brookfield Renewable Partners (Brookfield Renewable Partners Stock Quote, Chart, News, Analysts, Financials TSX:BEP.U). The analyst maintained a “Buy” rating and target price of $50/share for an implied return of 61.7 per cent in an update to clients on Wednesday. Founded in 1999 and headquartered in Toronto, Brookfield Renewable Partners owns a portfolio of approximately 19,000 megawatts of installed electric capacity, generated through hydroelectric, wind, solar, distributed generation, pumped storage, cogeneration and biomass sources in North America, Colombia, Brazil, Europe, India and China. Baydoun’s latest update comes after Brookfield announced the acquisition of Urban Grid, a private, Virginia-based utility-scale renewable power project developer. “Importantly, from a strategic perspective, this acquisition will materially expand BEP’s US development pipeline, which is expected to triple to ~31GW of gross capacity,” Baydoun said. “This will make BEP one of the largest clean energy developers in the US (providing additional scale), and further extend the Company’s growth runway in the country.” Brookfield is one of a number of partners making the $653 million acquisition, though the company did not officially disclose its stake in the transaction, nor did Brookfield provide any expectations in relation to how accretive the acquisition would be for them. According to Baydoun, if Brookfield is assumed to have purchased a 25 per cent ownership stake, the investment would likely generate somewhere between $15 and $20 million in funds from operations (FFO) for the company. Baydoun expects the company to make use of its existing liquidity to fund the transaction. “The joining together of our outstanding teams and adding Urban Grid’s high-quality pipeline of clean energy projects presents an exceptional opportunity for Brookfield Renewable to further establish itself as the leading renewable energy provider in the country,” said Mitch Davidson, Chief Executive Officer of Brookfield Renewable’s U.S. business in the company’s January 26 press release. “Urban Grid’s team not only deepens our development capabilities, but it also provides strategic access to key U.S.markets, serving as the perfect catalyst to accelerate Brookfield Renewable’s growth.” Founded in 2010, Urban Grid specializes in utility-scale and battery storage project development in the United States, featuring a development pipeline of approximately 20GW spread across 12 states. All told, 13GW of Urban Grid’s present capacity is utility-scale solar, with the remaining seven gigawatts being energy storage development pipelines. Meanwhile, the company also has approximately two gigawatts of under construction or ready-to-build solar projects, paired with four gigawatts of advanced stage, de-risked prospective opportunities, which Baydoun expects will lead to follow-up investment opportunities for Brookfield while accelerating project development. “Brookfield Renewable is the right home for Urban Grid. Our exceptional team and extraordinary portfolio combine to complement and expand Brookfield’s U.S. development operations, and this move enables the next phase of growth for our organizations,” said Frank DePew, President and Chief Executive Officer of Urban Grid. “Furthermore, Brookfield’s collaborative culture and entrepreneurial spirit match our DNA. With enormous pride and gratitude, I look forward to leading Urban Grid as part of Brookfield to make a meaningful contribution towards achieving a clean energy future.” Baydoun expects the company’s financial picture to continue showing strength going forward, as he projects the company’s Prop. EBITDA to grow from the reported $1.6 billion in 2020 to a projected $1.9 billion in 2021, with expected growth to $2.06 billion in 2022 and $2.2 billion in 2023. (All figures in US dollars unless otherwise noted.) Baydoun also expects the company’s FFO/share to increase in the same time period, projecting an increase from the reported $1.32/share in 2020 to an estimated $1.45/share in 2021, then growing further to a projected 1.64/share in 2022 and $1.80/share in 2023. Meanwhile, Baydoun expects a similar pattern in the company’s FCF/share, forecasting an increase from $1.08/share in 2020 to a projected $1.25/share in 2021, with anticipated rates of $1.28/share in 2022 and $1.43/share in 2023. Baydoun’s valuation guidance also shows positively for Brookfield, as he projects the company’s EV/EBITDA multiple to drop from the reported 20.2x in 2020 to a projected 18.5x in 2021, then to a projected 17.4x in 2022. The P/FCF multiple follows a similar track, with Baydoun projecting a drop from the reported 29.2x in 2020 to a projected 25.3x in 2021, then to a projected 24.7x in 2022. Overall, Baydoun views Brookfield Renewable Partners as a premium brand in the renewable energy sector, buoyed by premium value hydro assets and industry-leading growth and total shareholder return profile. “We continue to like BEP’s high-quality global renewable power platform (>20GW), high degree of contracted cash flows, long-term organic and M&A-based growth strategy, and attractive income characteristics,” Baydoun said. Over the last 12 months, Brookfield’s stock price has dropped by 29.6 per cent, with a 7.7 per cent decline in January. The stock fell to a 52-week low of C$40/share on Tuesday, a far cry from the 52-week high point of C$61.49/share on February 8.