RBC ups target price on 'compelling' Contour Global

Analysts at RBC Capital Markets believe Contour Global's strong operational asset base and its potential for value accretive M&A made investment in the firm a very appealing prospect.

RBC called Contour Global's investment case "compelling" on Tuesday, noting that the firm's current share price attributed minimal value to its development pipeline even as it upped its target price on the firm's shares from 310p to 325p.

The Canadian broker applauded Contour Global's recent acquisition of 250 megawatts of concentrated solar power assets in Spain. RBC felt the purchase was "significant in de-risking the Contour Global investment case", with operational assets now accounting for roughly 75% of its total enterprise value, which was up from 55% before than transaction.

Contour Global would now rely less on M&A transactions to achieve its 2022 EBITDA target, according to RBC, adding "more certainty" to the group's future earnings.

RBC was adamant that there was "limited downside" in its valuation, stating that the market had attributed "minimal value" to Contour Global's development pipeline or potentially value accretive acquisitions.

The analysts also reiterated their 'outperform' rating on the stock.