Comments / Upgrades G&M Dec 21 Industrial Alliance Securities analyst Elias Foscolos raised his rating for Pembina Pipeline Corp. (PPL-T -0.80%decrease
) to “buy” from “hold” in response to a 7-per-cent drop in share price last week, which he attributed to a negative reaction to the Dec. 14 release of its 2021 business release.
“With PPL announcing a modest 2021 growth program and expected impairments to come, we believe the bad news is out there and, moving forward, we believe risk is skewed to the upside,” said Mr. Foscolos.
“PPL’s underlying business fundamentals remain solid, in our view, and 2021 EBITDA guidance is in line with prior consensus forecasts. The Company has stated that performance closer to the high end of its guidance range would generate discretionary free cash flow, which would support deleveraging, share repurchases, or a dividend increase. We also believe that the current 2021 capital budget is largely a function of a lack of visibility in the current environment, and there is upside for additional projects to be sanctioned in the coming year. PPL continues to evaluate Peace Pipeline Phase VIII and IX expansions and the Prince Rupert Terminal Expansion, and expects to make final decisions in 2021.”
Mr. Foscolos maintained a $37 target price for Pembina shares. The current average on the Street is $37.77, according to Refinitiv data.