Enbridge Keeps Buy Rating from TPH 11:27 AM EDT, 11/05/2021 (MT Newswires) -- Tudor, Pickering and Holt Reiterated its buy rating on the shares of Enbridge (ENB.TO) with a C$54.00 target price after the pipeline and power company reported third-quarter results that met most expectations.
"Neutral. Enbridge printed a modest Q3 EBITDA beat of C$3.3B, 3% ahead of TPH with a narrower variance to the Street driven by strong Gas Transmission contributions offset by a weaker US dollar and lower Energy Services from tight differentials," analyst Matt Taylor said in a note. "To achieve FY'21 guidance of C$13.9-14.3B, in-service of Line 3 and contributions from new projects placed into service, including the Moda Midstream assets, should offset continued weaker Energy Services and lower FEX. DCF came in at C$1.13/sh, well ahead of our estimate of C$1.01/sh and consensus at $1.04/sh due to lower maintenance capex and current tax, while FY guidance was reiterated at C$4.70-5.00/sh.
Mainline volume guidance was provided for Q4 at 2.95mmbpd implying a FY'21 average of 2.75mmbpd, largely in-line with previous guidance of 2.8mmbpd. No change to Line 3 guidance of C$200mm of EBITDA expected in Q4'21. On energy transition, a major focus continues to be in the Utility with the first hydrogen blending pilot commissioned and construction of the seventh RNG project underway, while construction of three offshore wind projects and four solar self-power projects are ongoing.
Recent partnership announcements with Vanguard Renewables and Shell provide additional opportunities to invest in other low-carbon energy solutions. On Mainline contracting, the Canada Energy Regulator's hearing has concluded, and a decision is expected this month with Mainline tolls operating on an interim basis as the Competitive Toll Settlement (CTS) expired on June 30th. Overall, steady earnings release reflecting the utility-like business model and focus on ESG-friendly development without any material capex creep and major project risk appearing the lowest it's been in years. Maintain Buy."