TC Energy Upgraded as Biden to Revoke Keystone XL Pipeline Permit

Credit Suisse analyst Andrew Kuske says President Biden’s decision to revoke the permit for TC Energy’s Keystone XL pipeline removes a distraction.
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TC Energy  (TRP) - Get Report was upgraded to outperform from neutral by Credit Suisse analyst Andrew Kuske, who said President Joe Biden’s decision to revoke the permit for TC’s Keystone XL pipeline removes a distraction for the company.

The move makes the stock “less noisy,” he wrote in a commentary cited by Bloomberg. 

Kuske raised his price target to C$70 (US$55.30) from C$65. TC shares that trade on the NYSE recently stood at US$45.20, up 2.2%.

They'd dropped 19% over the year through Wednesday as oil prices fell during the pandemic. They have rebounded 3% in the past month as oil recovered.

Kuske said that “on a longer-term basis, ... some of the key questions become the ability to backfill meaningful capital expenditures from the current asset base (along with natural extensions) along with acquisition aspirations starting to creep into the narrative.”

TC has significant competitive advantages in the Western Canadian Sedimentary Basin and Marcellus production areas, he said.

Morningstar analyst Joe Gemino puts TC’s fair value at $51. 

“[Fears] of the perfect storm of outside factors -- rising interest rates, uncertainty over the status of Keystone utilization, and the Federal Energy Regulatory Commission's proposed tax disallowance, coupled with increasing leverage associated with the current investment cycle -- have been put to rest,” he wrote this month

“We expect TC Energy to meet its targeted 8%-to-10% annual dividend growth in 2021 and 5%-to-7% thereafter, driven by a healthy pipeline of growth opportunities. TC Energy boasts C$37 billion in commercially secured capital projects in its growth portfolio.”