Analyst Actions: Credit Suisse Reinstates Coverage With Outperform Rating, Target Price of $32 on Brookfield Infrastructure Partners
Reinstatement of coverage: "Following a research restriction, we reinstate Brookfield Infrastructure Partners ( BIP ) coverage with an Outperform rating and a US$32.00 target. Given BIP is scheduled to report Q3 2011 results on Friday, November 4th, our financial estimates remain unchanged at this time. We are forecasting earnings per unit of US$0.30, however, for a few reasons, we do not believe a reliable consensus number exists at this time. From our perspective, the Funds from Operations (FFO) is a more useful metric for BIP and we forecast US$0.61 per unit at the Brookfield Infrastructure L.P. level which may relate to the Street's lone cash flow estimate of US$0.56 per unit. In light of the long-cycle nature of most of our coverage universe, we do not place undue emphasis on quarterly results.
Selected highlights: "Some areas to watch include: (a) BIP's capital plans; (b) outlook for further toll road acquisitions and developments; and, (c) log price realizations, harvest rates and the extent of exported timber.
Ongoing organic growth: "We continue to believe a considerable amount of organic growth exists within BIP's existing asset base. Additionally, from our perspective, the Brookfield Group (broadly) is very well positioned to acquire selected infrastructure assets in need of de-levering over the coming years.
Valuation: We reinstate our Outperform rating and US$32.00 target price. The target price is obtained from multiple valuation methods including: a NAV of US$32.44, a targeted 4.4% distribution yield; and, an 11.9x multiple on our 2012e FFO. We reinstate our Outperform rating."