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Analyst Actions: Credit Suisse on Canadian Infrastructure

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Yielding a Positive Outlook in a Low Interest Rate Environment; Rating Changes; Revising Ests & TPs

Lower for longer: In a broad re-assessment of the macro drivers and sector-specific issues, we made numerous rating and target price changes to our core infrastructure coverage universe, including:

Capital Power Corporation: downgrade to Neutral (from OP);

Emera Inc.: reinstate coverage with an Outperform;

Enbridge Inc.: upgrade to Outperform from Neutral;

Fortis Inc.: upgrade to Outperform from Neutral; and,

TransCanada Corp. upgrade to Outperform from Neutral.

Rate reliance: We believe the conditions for a prolonged environment of low interest rates exist in Canada, making our names increasingly attractive in the near term. A clear funds flow risk exists away from the sector and rising interest rates, but these issues are reasonably priced at the current yields.

Some investment themes: We prefer infrastructure players with contracted exposure, constructive regulatory frameworks and meaningful opportunities to deploy cash flow over a longer timeframe. Given these views, we favour pipeline companies (ENB and TRP) over regulated utilities (EMA and FTS), and our least preferred area of exposure is merchant power (CPX and TA).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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