Upgrades / Target Bumps Scotia’s Robert Hope bumped his Gibson Energy Inc. (GEI-T -1.01%decrease
) target to $26 from $25 with a “sector outperform” rating. Other changes include: Stifel’s Cole Pereira to $25 from $26 with a “buy” rating and BMO’s Ben Pham to $25 from $22.50 with a “market perform” recommendation. The average is $25.50.
“Gibson Energy’s legacy infrastructure business continues to perform well and the South Texas Gateway Terminal (STGT) saw record volumes in the quarter,” said Mr. Hope. “Management continues to speak favourably about the re-contracting outlook for STGT, and we see this announcement as a catalyst for the shares. We move our 2024 estimates down slightly to reflect a more modest Marketing outlook, though our longer-term estimates are largely unchanged. We also introduce our 2026 estimates, and move forward our valuation by a year. This drives up our target price ... Year-to-date, Gibson’s shares have been the top performer in our coverage universe. We believe there could be further upside as STGT is re-contracted, though we will have to wait a little longer for this. We have a favourable view on Gibson given its (1) strong balance sheet (2024 debt to EBITDA of 3.2 times vs. target of 3.0-3.5 times) and easy-to-execute funding plan, (2) low payout ratio (2024E 61% versus target of 70-80 per cent) and very secure 7.2-per-cent go-forward dividend yield, and (3) improved growth outlook.”