Brookfield Renewable Partners (BEP.UN)

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Hi Dan and Matt!

I see BEP.UN is one of the foundational stocks. I researched it a bit and marketbeat.com upgraded their price target to $48 (under analyst rating tab). Some brokerage firms rated it as underperform, hold or neutral. Why is that? Is it still a good investment and what is your price target? Also, how do you read the analyst rating history on marketbeat? For example, if there is an update saying Buy, Price Target $48, does that mean that you should buy at $48 or this is the term target for the stock? I’ve been trying to figure out the interpretation of this analyst table for a while now so I guess it’s time I ask you 🙂

Thanks!

Brigitte

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Asked on April 27, 2020 12:25 pm
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Private answer

Hi Brigitte,

We don't use Market Beat. The data we use for analysts estimates comes from Zacks Investment research. Analysts will upgrade and downgrade stocks, or rate them as buy, hold and sells for a wide variety of reasons. Typically, analysts give one-year price targets. In the example you gave, it is likely the analyst gave the stock a one-year target of $48.00 per share.

Keep in mind that with BEP, a $48.00 target is likely in USD, not CAD. In the case of BEP, analyst have a mean price target of CAD$63.86 per share today. In other words, analysts think BEP would be worth CAD$63.86 per share in one-year from now. Since BEP is trading at $64.89 per share, one would think it is has limited upside.

Keep in mind, analysts estimates are but projections. Inevitably, some will be right and others will be wrong. Going back to BEP, the high target is $71.82...this analyst believes the share price is undervalued. The low on the street is $49.66. It is likely that this analyst believes the stock is overvalued.

In terms of ratings, typically all the analysts ratings are combined into an average recommendation. In the case of BEP, the average analysts rating is a "buy" which means on average, they believe the company is a good buy today.

It is important to note however, that analysts ratings typically lag the markets. It is why you will often see analysts downgrade or upgrade the stock after it has already made a move. Don't rely on these alone to make your investment decisions. What it does, is give you an idea of what analysts think of the stock.

Mat

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Posted by Mathieu Litalien
Answered on April 27, 2020 5:12 pm