Shares of Pattern Energy (PEGI) are on the rise as Goldman Sachs and Wells Fargo call the recent selloff on concerns about the new government in Ontario "overdone". The stock was under pressure last week after Ontario Premier Doug Ford vowed to cancel and wind down more than 750 contracts for renewable power projects, making good on a campaign pledge to revamp the province's energy policies. However, an official list of impacted projects has since been published and none are associated with the company.

'KNEE-JERK REACTION' OVERDONE: In a research note to investors, Goldman Sachs analyst Brian Lee noted that Pattern Energy shares had traded down 8% following news that Ontario's new government issued a directive to cancel over 750 green energy projects. However, the analyst said he expects the stock to rally now that Ontario published the official list of impacted projects, which included none that were associated with Pattern and only five wind projects in total out of the 758 being canceled. The cancellation parameters appear to focus on projects that have yet to receive Notice to Proceed or were part of a 2014 bid process that have not met their key development milestones, he contended. Lee sees the stock's weakness as a buying opportunity, reiterating a Buy rating and $22 price target on the shares.

Voicing a similar opinion, his peer at Well Fargo told investors in a research note of his own that Pattern Energy's fall on concerns over the safety of its FIT contracts with Ontario's IESO is a buying opportunity. Analyst Neil Kalton argued that it is highly unlikely that existing FIT contracts will be amended. Pattern Energy would have little to no motivation to renegotiate the terms of the contracts, and any legislation that changed the terms of the FIT contracts would likely face significant legal challenges, he contended. Furthermore, Kalton pointed out that the long-term consequences of any attempt by the province to back out of existing FIT contracts should give the government great pause, as such an action could materially increase Ontario's cost-of-capital and investors would ascribe far more risk to any investments in the province. The analyst reiterated an Outperform rating and $21 price target on Pattern shares.

PRICE ACTION: In morning trading, shares of Pattern Energy has gained 3.6% to $17.70.