From todays Globe and Mail Following the late Wednesday release of its 2025 growth capex budget and the announcement of an extension and amendment of a long-term contract at its Gateway Terminal, BMO Nesbitt Burns analyst Ben Pham raised Gibson Energy Inc. to “outperform” from “market perform,” seeing an attractive return to his revised target for its shares.
“GEI’s 2025 capital budget release highlights the optionality of its Gateway Terminal, with a contract extension driving significantly higher revenue for that customer and sanctioned a new project supporting visibility to achieving 15–20-per-cent Gateway Terminal EBITDA growth by end of 2025,” he said. “Combined with a sharp focus on cost containment, share buybacks expected in 2025 and relative valuation discount (2026 EV/EBITDA of 9 times vs. 11.5 times peer average), we are upgrading shares.”
Mr. Pham’s target is $28, up from $25.50. The average is $26.71.
Other changes include:
* Scotia’s Robert Hope to $26 from $25 with a “sector outperform” rating.
“We have a favourable view on Gibson given its (1) strong balance sheet (2024E debt/EBITDA of 3.4 times vs. target of 3.0-3.5 times) and easy-to-execute funding plan, and (2) low payout ratio (2024E 67 per cent versus target of 70-80 per cent) and very secure 7-per-cent go-forward dividend yield. To reflect our higher estimates as well as an improved volume and contracting outlook at STGT, we have increased our PT,” said Mr. Hope.
* Raymond James’ Michael Barth to $30 from $28.50 with a “strong buy” rating.
* National Bank’s Patrick Kenny to $27 from $26 with an “outperform” rating.
* CIBC’s Robert Catellier to $29 from $27 with an “outperformer” rating.