Markets

Analyst Actions: Credit Suisse Keeps "Outperform" on TransCanada Corp, TP at $52

Intra-Alberta action: "TransCanada and Phoenix Energy Holdings Limited entered into a binding agreement for the Grand Rapids Pipeline project. Each company will own 50% of the proposed 500km C$3bn pipeline project that includes both a crude oil and a diluent line with an intent to ship crudes from northwest of Fort McMurray to Edmonton. Very limited financial details were released, however, we view this announcement as strategically positive for two primary reasons: (1) TRP will be in the intra-Alberta crude oil pipeline market with a sizeable asset; and, (2) the pipeline may help TRP's efforts in getting volumes for a potentially converted Canadian Mainline pipeline to crude. We believe the stock trades positively on this news flow."

Selected details: "Notable points include: (a) the pipeline will have capacity to move up to 900k barrels per day or crude and 330k bpd of diluent; (b) the in-service date is expected to be early 2017; (c) capital spend will be focused in 2014-2017; (d) Phoenix Energy Holdings holds a collection of oil sands leases controlled by Chinese entities."

Investment themes: "We believe the company's asset base is favourably positioned for a number of investment themes, including: increasing future volumes from Alberta's oil sands; Northern natural gas; and, low cost generation exposure in a number of structurally tight power markets."

Valuation: "Our C$52.00 target price is primarily obtained from a yield driven valuation approach, including: an implied 3.4% dividend yield along with a 140 bps yield spread on a 2% Canadian 10-year. We maintain our Outperform rating."

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

Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.


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

Other Topics

Commodities