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Investing.com - Jefferies downgraded Pembina Pipeline Corp . (TSX:PPL) (NYSE:PBA) from Buy to Hold on Wednesday, while reducing its price target to C$53.00 from C$61.00.
The downgrade comes as Pembina faces "material headwinds" including an ongoing toll dispute on its Alliance pipeline and the postponement of DOW’s ethane cracker project, which Pembina was set to supply.
Jefferies noted that while a resolution on the Alliance pipeline dispute is expected shortly, "the magnitude by which the toll comes down is the key unknown" and remains a significant overhang for the stock.
Despite these near-term challenges, Jefferies acknowledged Pembina’s "broad footprint and scale across gas processing, fractionation, and pipelines" positions the company favorably within the Western Canadian energy landscape over the medium and longer terms.
The firm also indicated that Pembina currently "screens less attractively on total return" when comparing EBITDA compound annual growth rate plus dividend yield against Jefferies’ Buy-rated midstream companies.
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