Terraform Global Will Find A Way Forward; Barclays Starts At Overweight

• TerraForm Global, Inc. (NASDAQ: GLBL) has seen a 38.21 percent decline in its share price year-to-date.
• Barclays’ Jon Windham has initiated coverage of TerraForm Global with an Overweight rating and price target of $12.
• Windham believes that growth in the underlying dividend per share in the mid-teens would be able to offset the impact of the decline in sponsor subsidies.

According to the Barclays report, there is meaningful potential for growth in emerging markets renewable power if the company is able to “execute its non-equity funded 2016E growth and re-spark investor interest in the story.”

“We view the stock as a high risk/reward investment and expect little investor patience for execution missteps,” Windham stated.

The dividend per share (DPS) for TerraForm Global’s Class A Shares for 2016 is estimated at $1.20, consisting of $0.39 in sponsor subsidies and $0.81 from portfolio assets. The company is expected to exit 2016 with DPS of $1.30, at an annualized run rate.

“We expect the equity portion of 2016 acquisitions to be funded with $133mn in retained cash flow from the initial asset portfolio and foregone sponsor dividends from listing through YE2016,” the report said.

Windham believes that the company would be able to access the equity capital needed to fund growth and mitigate the declining sponsor subsidies through share-in-kind asset acquisitions, further deferred dividends for the Class B shares, IDR re-scheduling and purchase of sponsor subsidized projects.