Hannon Armstrong ‘s improving fundamentals should lead to a turnaround for the stock, according to Morgan Stanley. The investment bank upgraded the stock to overweight from equal weight and reiterated its $23 per share price target. That forecast points to more than 32% upside from Monday’s close. Structured as a real estate investment trust, Hannon Armstrong provides renewable energy projects with debt and equity capital. Shares are down roughly 40% this year. Analysts led by Andrew Percoco attributed the steep decline to “overdone” investor frustrations toward the outlook for renewables. HASI YTD mountain HASI YTD chart The analysts believe the selloff cannot be justified when given the company’s strategic business decisions, along with its balance sheet flexibility and move toward an equity self-funding model. “At current levels, we estimate that the stock currently prices in no future dividend growth assuming an approximately 12% discount rate, an overly punitive assessment of HASI’s forward outlook,” the note said. Additionally, Morgan Stanley noted that the sustainable investment firm’s high cash flow can support steady dividends to come. Debt refinancing also poses no near-term risks – an added catalyst in this higher-rate environment – since Hannon Armstrong’s next corporate debt won’t mature until 2025 and 2026. Finally, the analyst praised the company’s demonstrated ability to maintain investment spreads in a higher-rate environment. “HASI has demonstrated success in pricing gross asset yields higher to account for higher interest rates, allowing it to generate consistent net investment margins across different funding environments,” he wrote. “We expect the stock to migrate toward our DDM [dividend discount model]-derived fair value as execution refocuses investors on HASI’s solid fundamentals.” Morgan Stanley isn’t the only firm on Wall Street that likes Hannon Armstrong. Earlier this month , Baird named the stock a bullish fresh pick, noting it sees more than 80% upside. — CNBC’s Michael Bloom contributed to this report.