Enbridge shares slump after analyst downgrade
BNN Bloomberg
Shares in Enbridge Inc. fell on Monday as an analyst cut his view on the stock after watching it rally ahead of its peers.
Shares in Enbridge Inc. fell on Monday as an analyst cut his view on the stock after watching it rally ahead of its peers.
Robert Hope, who covers the pipeline sector for Scotia Capital, cut Enbridge to “sector perform” (the equivalent of hold) from “sector outperform” (the equivalent of buy) on Monday, even while raising his price target to $58.00 per share from $55.00.
As of 12:35 pm, Enbridge shares were the most influential drag on the S&P/TSX Composite Index Monday, and were single-handedly responsible for taking almost 40 points off the index.
Hope said the price target was bumped up based on his new estimates for Enbridge in 2024, which includes three-per-cent growth in the company’s earnings before interest, taxes, depreciation, and amortization.
While he wrote that he expects the company's gas pipelines, gas distribution, and renewable power units will deliver moderate growth, he cautioned that Enbridge's liquids pipeline business might only post "limited" cash flow growth in 2024 as the Trans Mountain expansion pulls away shipping volumes.
He added that the ongoing dispute over tolls on Enbridge's Mainline pipeline network and the legal battle with the state of Michigan over Line 5 are additional impediments to the stock's valuation, though Hope said he's expecting them to be resolved without "negative outcomes."
