Post by
perplexed01 on Nov 07, 2022 10:18am
cibc analyst: target C$ 49
Q3/22 Results: Marketing Beat And Guidance Raised; Raising Price Target
Our Conclusion The company is performing well and marketing results caused a material beat versus our estimate during the quarter, and the company raised guidance again. Stronger commercial opportunities following the Pembina Gas Infrastructure (PGI) transaction, lower cash taxes and solid volumes lead us to raise our DCF-based price target from $47 to $49; however, the return potential to our price target causes us to reiterate our Neutral rating.
Key Points
Results In Line And 2022 Guidance Raised: Adjusted EBITDA of $967MM beat our estimate of $874MM and consensus of $879MM. Meanwhile, Diluted AFFO/share of $1.03 slightly missed our estimate of $1.07 and was in line with consensus of $1.04. Guidance for 2022 was raised to include adjusted EBITDA of $3.625B-$3.725B, up from $3.575B-$3.675B in Q2 on the back of stronger marketing results. Both our estimate and consensus were already within the new guidance range, so the increase is not a major change. Our prior 2022 estimate was $3.686B and prior consensus was $3.670B.
Capital Allocation And Business Updates: The company continued to repurchase shares during the quarter, now up to a total cost of ~$288MM repurchased since Q4/21, and up from $122MM in Q2/22. The company is committed to repurchasing up to $350MM by year end. The company has also executed on the planned 3.6% dividend bump, effective with the October dividend. Beginning in 2023, the company will move from a monthly to a quarterly common share dividend payment. Following closing of the PGI transaction, the company is more optimistic on revenue opportunities. Combined with expectations of tax benefits, this causes us to raise our price target.
Infrastructure Volumes Beat Our Forecast: Pipeline volumes of 2,563 MBbl/d slightly beat our estimate of 2,516 MBbl/d, while Facilities volumes also beat at 848 MBbl/d vs. our 753 MBbl/d, an encouraging initial result following the PGI transaction. Strong operational results reflected higher volumes on conventional systems, and fewer outage days than expected in the facilities segment.