TerraForm Power Inc. (NASDAQ: TERP) is not as well known by the traditional solar investing and alternative energy investing crowd as some of the traditional solar and alternative energy stocks. The yieldco move has been harder for many traditional solar investors to figure out, versus just analyzing companies that make the solar panels.

Still, some investors are interested in all aspects of solar or alternative energy. If they can get a solid dividend or distribution, even better. A report from Bank of America Merrill Lynch on Tuesday has resumed analyst coverage of TerraForm Power with a Buy rating. The firm’s price objective is up at $29.00.

Where this call gets interesting is that the appreciation upside and the distribution yield could generate over 50% of implied upside. Still, it is complicated, and there are some things investors need to consider before they just jump in blindly chasing the Merrill Lynch call. The company also has ties to SunEdison Inc. (NYSE: SUNE).

Brian Chen and Andrew Hughes were the analysts who resumed the official Buy rating. They said that their dividend trajectory has come down, and they noted that peer yields have expanded substantially. This analyst team still finds the underlying growth story and valuation attractive in TerraForm, despite its shares having significantly underperformed against its peers.

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The $29.00 price objective is based on a 7% target yield on the firm’s 2017 dividend per Class A share forecast of $2.00 (versus about $1.34 today). The analysts went on to say:

We estimate the intrinsic value of the existing portfolio at $18.00 per share. Growth visibility includes over 1GW of operating assets held in warehouse facilities in addition to SunEdison’s committed 3.7GW Call Right list. Our model assumes a 10% cash return on future acquisitions at what we estimate is an 8% cost of equity and 7.1% WACC.

A key risk remains the pace of future acquisitions and associated financing requirements relative to the market’s willingness to finance Terrraform’s (and the sector’s) growth ambitions. The resulting potential volatility in TerraForm shares and cost of capital could call into question the viability of both YieldCo and sponsor growth.

Lastly, Merrill Lynch likes the portfolio of long-term contracted wind and solar assets. It is forecasting 20% compounded growth per year in its Class A distributions from 2015 to 2018. They said:

Management targets 24% compound annual growth in limited partnership distributions through 2019 through continued drop downs from its sponsor as well as third party M&A.

Our model incorporates the dropdown of assets currently part of Terraform’s Call Right agreement with its sponsor and general partner (GP) SunEdison, Inc. (NYSE: SUNE) as well as M&A opportunities in 2017 to 2018.

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What matters here is that TerraForm is barely above its 52-week low. Shares were at $19.87 prior to the call, within a 52-week range of $19.53 to $42.66. That $29.00 price objective sounds very bullish, but the consensus price target from analysts in the Thomson Reuters coverage universe is $36.25.

TerraForm Power was up 2.5% at $20.38 in mid-Tuesday trading.

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