UPDATE: Bank of America Downgrades TC Pipelines LP to Neutral, Raises PT on Multiple Factors

In a report published Thursday, Bank of America analyst Gabe Moreen downgraded the rating on TC Pipelines LP

from Buy to Neutral, but raised the price target from $48.00 to $51.00. In the report, Moreen noted, “We are downgrading TCP to Neutral (from Buy) for the following reasons, 1) strong unit performance YTD (up 22%) and less attractive valuation at current levels, 2) minimal organic growth over the medium-term, 3) some remaining recontracting risk – despite limited direct commodity exposure, 4) drop-down potential from its general partner (GP), TransCanada (TRP), that is potentially sizeable but sporadic (last drop-down was two years ago), and 5) forecasted low single digit cash distribution growth and tighter coverage ratios.” TC Pipelines LP closed on Wednesday at $48.96.