Upgrades /Comments /Adjustments- G&M * Following Gibson Energy Inc.’s (
) late Monday release of its 2024 capital budget and two additions to its Board, CIBC’s Robert Catellier bumped his
target for its shares to $26 from $25 with an “outperformer” rating, while Stifel’s Cole Pereira cut his target to $26.50 from $27 with a “buy” rating. The average is $25.
“GEI announced a 2024 capital plan of $190-195-million ($150-million growth, $40-45-million maintenance), above our prior estimate of $155-million and the Street at $146-million,” said Mr. Pereira. “We believe 2024 maintenance capex is a reasonable go-forward run rate, with the year-over-year increase relating to the core business as opposed to STGT. Additionally, 2023 growth capex is expected to be $125-million, below our prior estimate of $149-million. Our 2024 DCFPS [distributable cash flow per share] estimate declines 3 per cent to $2.65 per shares, which sees our target price decline to $26.50 per share (from $27.00 per share) while we reiterate our Buy rating. Moreover, the program remains fully self-funded with 2024E FCF of $280-million vs. dividends of $272million. GEI offers attractive DCFPS growth in 2024E (4 per cent, or 14 per cent normalizing for Marketing) which is likely to be attractive to investors once the STGT contract profile is de-risked. Meanwhile, the stock trades attractively at 7.8 times 2024 estimated P/DCFPS vs. its peers at 8.3-10.0 times.”