Tudor, Pickering, Holt on Tuesday reiterated its hold rating on the shares of Enbridge (ENB.TO, ENB) with a C$58.00 price target after the pipeline and utility company released 2025 guidance and raised its dividend.
"Positive. This morning ENB furnished 2025 adjusted EBITDA guidance of C$19.4-C$20.0B, beating TPHe (C$19.2B) and Street estimates (C$19.5B). The delta is mostly driven by better-than-expected guidance from the Liquids and Gas Distribution segments. At the midpoint, next year's guide represents 9% growth y/y, driven by higher utilization rates, new growth projects entering service, contributions from acquisitions, and newly formed JVs. Of its secured project backlog, ENB expects to place into service ~C$5B worth of projects in '24 and C$6B in '25. Looking at the segment-level guides, Liquids Pipelines '25 adj. EBITDA guidance came in at C$9.6B (TPHe C$9.4B). ENB expects Mainline volumes to be 3mmbpd in '25, which is flat y/y. Incremental earnings will be driven by higher tolls resulting from Mainline escalators, as well as new growth projects entering service. In the Gas Distribution segment, ENB sees '25 adj. EBITDA at C$4.1B, compared to TPHe C$3.7B. ENB cited Ontario customer additions, rate escalations, and the first full-year of contributions from the US utilities as the primary drivers of growth. Other key assumptions of the '25 guidance include system optimization, C$200-C$300MM cost savings, and $1.35 CAD/USD exchange rate. In '25 ENB expects to use C$7B for debt maturities, C$8B for capital expenditures, and C$8B for dividends, of which C$14B will be funded internally with the remaining balance funded by debt. Leverage is expected to remain in the 4.5-5.0x range, inline with TPHe (4.8x)," analyst AJ O'Donnell noted.
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
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