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Pembina Pipeline Buy Rating Reiterated at TPH Ahead Of Fourth-Quarter Results

01/14/2021 | 11:59am
(MT Newswires) -- Tudor, Pickering & Holt on Thursday reiterated its buy rating on the shares of Pembina Pipeline (PPL.TO) with a C$40.00 target price ahead of the midstream oil and gas company's fourth-quarter earnings release.

"As a follow-on to client conversations after publishing our 2021 CAD midstream outlook, Pembina was one name with mixed sentiment heading into the year," the investment bank noted. "For Q4, we are modeling a modest EBITDA beat of C$853mm (+3% vs Street) implying full year results of C$3.27B vs guidance of C$3.25-3.30B driven by a steady recovery of the business and improved commodity pricing. As for 2021, we think the setup looks attractive with 2021 EBITDA of C$3.37B (+2% vs Street) coming in at the top end of the guidance range of C$3.2-3.4B driven by several factors: 1) Volumes expected to exceed 2020 levels, 2) Modest Ruby interruptible volumes, 3) Elevated LPG terminal utilization, and 4) Marketing contributions in excess of 2020. We acknowledge contract risks on some assets, but point to an average remaining contract term on Peace/Northern of 8 years with the system already extending into B.C. Increased investor interest should be driven by the potential to add brownfield expansions this year (Peace/LPG), and a top-tier 2021e FCF profile (+9% vs CAD peers of +2% and NAm peers of +8%) providing financial flexibility to either repurchase shares or reduce indebtedness. Maintain Buy."

(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:

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