Scotia’s Robert Hope raised his Keyera Corp. target to $42 from $40, keeping a “sector outperform” recommendation. The average is $36.67.
“We see numerous reasons to continue to be positive on Keyera, even with the company being the top-performing stock in our coverage universe year-to-date,” he said. “Specifically, a number of positive catalysts (project sanctioning) could be announced in the back half of the year that could be additive to our forecasts and valuation. Even with the spend associated with these projects, we expect Keyera to maintain its equity self-funding model, low leverage, and ability to buy back shares. The company should also benefit from increasing gas and NGL volumes in 2025 and beyond. We increase our target price by $2 to $42 to reflect a more visible growth outlook. Our $42 target price implies a 10.4 times 2026 estimated EV/EBITDA versus recent 2025 trading levels of 10.0 times. Keyera remains one of our favourite midstream names given it has (1) low leverage (management forecasts 2.2 times adj. debt to EBITDA at Q1/24 vs. target of 2.5-3.0 times); (2) a low payout ratio (59 per cent in 2024 vs. target of 50-70 per cent); (3) volume growth driving improving returns on existing assets, and (4) new project announcements.”