RE:RE:CIBC Adjusts ... G&M CIBC’s Robert Catellier updated his valuations for energy infrastructure companies in a research report released Tuesday.
“After a volatile 2020, 2021 was more constructive for Pipelines and Midstream companies as commodity prices increased and ESG issues were viewed from a more balanced perspective,” he said. “While rising interest rates create a headwind, we still see the opportunity for positive returns, although perhaps are more reliant on dividends and less so on capital gains than in recent years.
“Fundamentals remain quite strong, with volumes recovering to pre-pandemic levels, and OPEC+ demonstrating market discipline. Commodity prices are also high, and inventory levels are still below levels one year ago and generally below five-year ranges. While drilling activity is higher than 2020 and 2019 levels, it is still relatively modest compared to the commodity price fundamentals as producers have shown capital discipline to shore up balance sheets and return capital to shareholders.”
His target changes include:
- AltaGas Ltd. (
, “outperformer”) to $34 from $30. The average on the Street is $30.50. - Enbridge Inc. (
, “outperformer”) to $57 from $55. Average: $55.45. - Keyera Corp. (KEY-T, “neutral”) to $34 from $33. Average: $34.25.
- TC Energy Corp. (
, “outperformer”) to $69 from $72. Average: $67.21. - Tidewater Midstream and Infrastructure Ltd. (
, “outperformer”) to $2 from $1.75. Average: $1.90.
“Our preferred names include ALA and ENB as they have stronger dividend growth than the peer group, with ALA having further multiple expansion opportunity from deleveraging, while ENB has the capacity to supplement shareholder returns with share repurchases,” he said.