iA Capital ..G&M Enbridge Inc. (
) is “positioned to provide stable, low-risk growth through both conventional and low-carbon investments,” according to iA Capital Markets analyst Matthew Weekes.
Following Tuesday’s Investor Day even, he assumed coverage of the Calgary-based company, reiterating the firm’s “buy” recommendation for its shares after its 2022 guidance fell in line with his expectation.
Enbridge is projecting earnings before interest, taxes, depreciation and amortization (EBITDA) of a range of $15-billion to $15.6-billion, aligning with iA Capital Markets’ $15.46-billion forecast. Discounted cash flow per share of $5.20-$5.50 also met its estimate ($5.30).
“[Enbridge] is targeting 5-7-per-cent average annual DCF per share growth through 2024,” said Mr. Weekes. “ENB expects this growth to be driven by a combination of revenue escalators and efficiency enhancements, growth capital investment of $3-4-billion per year in highly strategic, capital-efficient projects, and deployment of up to $2-billion per year of excess capital, weighing additional organic growth against share repurchases, asset/tuck-in acquisitions, and further reducing leverage. ENB’s current secured growth backlog for 2022+ is $9.0-billion, including $4.5-billion in 2022.
“Growth opportunities [are] seen across the business, but we will most likely see an increasing shift to gas and renewable investments. ENB forecasts up to $6-billion of annual organic growth investment capacity, of which 75 per cent is attributable to gas and renewables, while liquids are still expected to remain a key component of the business and generate attractive returns and cash for investment in other areas.”
After refreshing the firm’s valuation for Enbridge, Mr. Weekes trimmed its target to $54 from $56, warning of “some medium-term risk in the Liquids Pipeline segment around Mainline tolling and other factors.” The average on the Street is $55.52.