Companhia Paranaense de Energia Pfd (ELP – Research Report), the Utilities sector company, was revisited by a Wall Street analyst on February 24. Analyst Gustavo Faria from Bank of America Securities maintained a Buy rating on the stock and has a $12.00 price target.
Gustavo Faria has given his Buy rating due to a combination of factors that highlight the positive financial outlook for Companhia Paranaense de Energia Pfd. One of the key reasons is the strategic asset rotation involving the Baixo Iguaçu Hydropower Plant, which is expected to add approximately 1% to the net present value of the company’s base-case valuation. This transaction not only enhances the company’s financial position but also opens up the possibility for additional dividends, which is an attractive prospect for investors.
Furthermore, the asset sale is projected to yield a 6% real internal rate of return, and Copel is anticipated to recognize a capital gain of R$190 million. This financial gain could further support dividend payouts, potentially increasing the dividend yield. Additionally, Copel’s strong EBITDA growth, driven by post-privatization improvements and cost-cutting measures, along with its high-quality power distribution assets in Paraná, contribute to a favorable investment case. These factors collectively underpin Gustavo Faria’s Buy rating for the stock.
Faria covers the Utilities sector, focusing on stocks such as Companhia Energetica Minas Gerais, Companhia De Saneamento, and Companhia Paranaense de Energia Pfd. According to TipRanks, Faria has an average return of 15.9% and a 100.00% success rate on recommended stocks.