Goldman Bullish On TransCanada, Neutral On Others In The Complex

On July 1, TransCanada Corporation (USA) TRP completed its acquisition of Columbia Pipeline Group Inc CPGX. Goldman Sachs’ Theodore Durbin reinstated coverage of the TransCanada complex.

TransCanada

TransCanada has been given a Buy rating and price targets of C$70 and US$54. The price targets imply return potential of about 20 percent.

“We are positive on TRP’s diversified business and backlog of growth projects,” analyst Theodore Durbin wrote. The recently-completed acquisition of Columbia Pipeline Group gives TransCanada access to the high-growth Marcellus and Utica basins.

The company could also benefit from supply growth in the Montney in Western Canada, “both from increased volumes on its long-haul assets, including the Mainline, and investment opportunities on its NGTL system,” Durbin mentioned. He added that the other potential upside catalysts included a successful resolution of the Keystone XL lawsuit or a reversal of the Keystone XL presidential permit, as well as long-dated growth projects like Energy East or BC LNG pipelines.

TC Pipelines

Coverage of TC Pipelines, LP TCP has been reinstated with a Neutral rating and a price target of $53. Durbin expressed optimism regarding the company’s fee-based asset portfolio, which is poised to benefit from supply growth and re-contracting in the Montney.

The analyst added, however, that the uncertainty surrounding the strategic review of TC Pipelines’ MLPs would likely keep units range bound.

Columbia Pipeline Partners

Columbia Pipeline Partners LP CPPL has been assigned a Neutral rating and a price target of $15.

“We are positive on CPPL’s exposure to the $8bn backlog of growth projects at Columbia OpCo, many of which are exposed to the high-growth Marcellus/Utica shale basins, but similar to TCP, we see limited distribution growth visibility beyond 2016 given TRP’s current strategic review of its MLPs,” Durbin mentioned.

Cheniere Energy Partners

The analyst downgraded the rating on Cheniere Energy Partners LP Holdings LLC CQH from Buy to Neutral, citing valuation. He maintained the price target at $22.

Within the Cheniere complex, shares of Cheniere Energy, Inc. LNG [Rated: Buy] are preferable, given the company’s “long-term FCF profile, solid marketing margins, and potential upside from the FID of Corpus Christi Train 3,” the Goldman Sachs report stated.

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