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On Tuesday, Jefferies analyst Vikram Bagri adjusted the outlook for Gibson Energy (TSX:GEI), trading under the ticker GEI:CN on the Canadian exchange and OTC: GBNXF, revising the company's stock from a 'Buy' to a 'Hold' status. The price target set by Jefferies for Gibson Energy now stands at Cdn$26.00.
The revision comes after considering the company's recent stock performance and valuation metrics. Gibson Energy's shares have seen a significant rise, with a 21% increase since the beginning of 2024, closely tracking the Toronto Stock Exchange (TSX) that showed a 22% gain in the same period. This growth has led to an expansion in Gibson's forward EV/EBITDA multiple by approximately 1x, bringing it near its historical average of around 9.5x.
Bagri noted that while positive catalysts have been realized through 2024, including recontracting at STGT and projecting sanctioning, these factors have already been reflected in the company's solid stock performance. As a result, the current valuation leaves insufficient upside to Jefferies' price target.
Despite the downgrade, Jefferies acknowledges the moderate upside potential for Gibson Energy shares, particularly highlighting the company's dividend yield, which is relatively higher compared to its peers. The firm's stance on Gibson Energy is currently neutral, opting to wait for greater clarity around the timing and magnitude of the next growth phase in the core infrastructure business before reconsidering its position.
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