Hannon Armstrong Sustainable Infrastructure Capital ( NYSE: HASI ) rose 1.7% after analysts defended the company following a short report from Muddy Waters on Tuesday that caused the shares to tumble 20%.
Analysts at B. Riley, Cowen and Oppenheimer recommended buying the shares after the weakness created by the short report.
"While renewable project finance accounting can be complex, we believe assessing corporate culture and best practices should be less so here." Oppenheimer analyst Noah Kaye, who has an outperform and $62 price target on HASI, wrote in a note on Wednesday. "We view HASI’s culture, business model, operating history and leadership on ESG reporting as antithetical to the report’s conclusions."
Muddy Waters alleged in the short report on Tuesday that HASI's accounting is complex and that the company appears to inflate its GAAP earnings, though Muddy Waters founder Carson Block reiterated several times that HASI wasn't doing anything illegal.
Hannon Armstrong ( HASI ) said in a statement to that the report was "an attempt to mislead and confuse the market." HASI also said the short call is "replete with factual errors and numerous ... inflammatory and misleading statements."
"While we agree that Hannon's financials are complex, which is common investor feedback we receive, we would disagree on the misleading contention," B. Riley analyst Christopher Souther, who has a buy rating on HASI, wrote in a note, though he cut his price target to $55 from $67 based on "multiple compression" across the sector.
Cowen analyst Jeffrey Osborn said in a note that he agreed with HASI that the report was "misleading" and he expected the shares we recover as the company provided greater detail. Cowen has an outperform rating and $70 price target on HASI.
Morgan Stanley analyst Stephen Byrd said he disagreed with a few fundamental points raised in the report, though he continued to asses the arguments raised.
"An understanding of the fundamental economic attributes of mezzanine debt in the context of renewable financings helps to address several elements of the short seller report," Byrd, who rates HASI equal-weight and has a $55 PT, wrote in a note.
Also see SA contributor' Ian Bezek's piece from earlier Wednesday entitled "Hannon Armstrong Sustainable Infrastructure: Take The Short Seller Allegations Seriously."
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Hannon Armstrong gains after analysts defend following short report