Analyst update Jefferies analyst Anthony Linton said he likes South Bow Corp.’s (SOBO-T) stability “with 88 per cent of EBITDA underpinned by long-term contracts (average term: 8.5 yrs) and yield proposition (9-per-cent yield).”
However, pointing to its “higher leverage profile and lower EBITDA/dividend growth versus peers,” he initiated coverage of the spinoff of TC Energy Corp.’s (TRP-T) crude oil pipelines business, which began trading on the TSX last Wednesday, with a “hold” recommendation.
We expect valuation to be a key debate owing to SOBO’s higher dividend yield, lower growth rate, concentrated asset base, highly contracted cash flow profile, and higher leverage,” said Mr. Linton.
Seeing its shares as “fairly valued,” he set a target of $32. The average is $34.