Citi sets TC Energy stock with Neutral rating, C$75 target

Published 04/04/2025, 11:30
Citi sets TC Energy stock with Neutral rating, C$75 target

On Friday, Citi analysts initiated coverage on TC Energy Corporation (TRP:CN) (NYSE:TRP), assigning a Neutral rating to the energy company’s stock alongside a price target of C$75.00. The new assessment reflects the firm’s view on the company’s position within the energy market, particularly in the natural gas and power sectors. According to InvestingPro data, TC Energy, currently valued at $50.64 billion by market cap, trades at 16.92x earnings and offers a 4.88% dividend yield.

TC Energy is recognized for providing investors with one of the purest exposures to natural gas and power, two rapidly expanding segments in the energy market. Citi analysts anticipate these sectors’ growth to propel TC Energy’s EBITDA by over 30% in the next five years, which would result in a compound annual growth rate (CAGR) of approximately 6%. InvestingPro analysis highlights the company’s impressive 53-year streak of consecutive dividend payments and historically low price volatility, making it an attractive option for income-focused investors.

Despite the positive outlook on the company’s growth potential, Citi analysts have identified concerns that may temper the enthusiasm. They note that TC Energy’s leverage is expected to remain high, which could impact its financial flexibility. Additionally, the forecast for the company’s growth is slightly slower compared to its peers.

The analysts also pointed out that TC Energy’s stock is trading at a premium of more than 1.0x relative to its peers. This premium is attributed to the company’s leading position in low-volatility and its exposure to strong, long-term growth drivers in the energy sector. However, the current valuation suggests that the market has already accounted for these positive aspects, leading to the Neutral rating.

In summary, while TC Energy is poised to benefit from significant macro tailwinds in the natural gas and power markets, the analysts at Citi believe that the current stock price adequately reflects these advantages, leaving little room for an upward re-rating in the near term.

In other recent news, TC Energy’s fourth-quarter 2024 earnings results have prompted varied reactions from analysts. RBC Capital Markets, following the earnings report, raised its price target for TC Energy to Cdn$74.00 while maintaining an Outperform rating. RBC’s analyst, Robert Kwan, noted weaker-than-expected earnings per share guidance for 2025 but expressed optimism about future quarters, citing TC Energy’s strategic financial commitments. In contrast, BMO Capital Markets lowered its price target to Cdn$71.00, maintaining a Market Perform rating. BMO pointed out a modest EBITDA shortfall and increased leverage as factors influencing its decision, yet acknowledged TC Energy’s defensive business model. Meanwhile, TD Cowen initiated coverage with a Buy rating and set a price target of C$73.00, highlighting the company’s streamlined operations following the spin-off of its liquids pipeline business. TD Cowen emphasized TC Energy’s focus on natural gas midstream and power infrastructure, noting a competitive 5% dividend yield as an attractive feature for investors. These recent developments indicate a mixed but cautiously optimistic outlook among analysts regarding TC Energy’s future performance.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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