Enbridge: A Balanced Hold Amid Growth and Regulatory Uncertainty

Analyst Benjamin Pham of BMO Capital maintained a Hold rating on Enbridge (ENB – Research Report), with a price target of C$54.00.

Benjamin Pham has given his Hold rating due to a combination of factors surrounding Enbridge’s current financial performance and future prospects. Pham acknowledges the strength of Enbridge’s base business, as evidenced by an 8% beat in Q1/24 results compared to consensus estimates, along with a resilient Mainline volume despite the recent start-up of the competing TMX pipeline. Moreover, the potential revision of the 2024 guidance in the upcoming second quarter, assuming successful closure of U.S. gas utility acquisitions, plays a role in this Hold rating. The company’s strong operational performance and a solid demand for its energy infrastructure support the business’s stable outlook.
However, despite these positive elements, Benjamin Pham maintains a cautious stance due to existing uncertainties. He points out the balance between Enbridge’s attractive yield and improved growth outlook against the backdrop of regulatory and funding uncertainties, particularly pertaining to pending U.S. gas utility acquisitions. The updated financial model reflects higher adjusted EBITDA estimates and incorporates the impact of more resilient Mainline volumes and the addition of a significant expansion project. Still, Pham’s Market Perform rating reflects a careful evaluation of risk and return, suggesting that while Enbridge might be a solid company, current conditions do not warrant an upgrade to a Buy recommendation.

Pham covers the Utilities sector, focusing on stocks such as Algonquin Power & Utilities, Northland Power, and Emera. According to TipRanks, Pham has an average return of 6.9% and a 65.54% success rate on recommended stocks.

In another report released on April 25, Stifel Nicolaus also maintained a Hold rating on the stock with a C$51.00 price target.

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Enbridge (ENB) Company Description:

Enbridge, Inc. is a Canadian energy infrastructure company that transports crude and other liquid hydrocarbons. The pipeline giant is also engaged in renewable power generation, gas distribution and storage as well as energy marketing services.