Bank of America Merrill Lynch Reiterates Buy Rating, $31 PT on Spectra Energy Corp.

In a report published Wednesday, Bank of America Merrill Lynch reiterated its Buy rating and $31.00 price target on Spectra Energy Corp.

. BofA Merrill Lynch noted, “Yesterday before market open, SE announced it entered into a definitive agreement to acquire a 100% interest in the Express-Platte crude oil pipeline for $1.5bn, including $240mn of acquired debt. Express-Platte was previously owned via an evenly split JV amongst two private Canadian pension investors and Kinder Morgan Energy Partners, L.P. (KMP). The system is currently one of three pipelines transporting Canadian crude oil into the Western US. Although the move can be viewed as somewhat defensive in the face of retreating NGL prices and arguably reflects a full multiple paid, we see several rationales for the deal: 1) additional fee-based cash flows (with built-in rate escalators), 2) a new crude oil platform that offers potential for additional growth, and 3) additional drop-down opportunities to SE's affiliate MLP, Spectra Energy Partners, L.P. (SEP).” Spectra Energy Corp. closed on Tuesday at $26.99.