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On Thursday, JPMorgan made an adjustment to the price target for Pembina Pipeline Corp . (PPL (NYSE:PPL):CN) (NYSE: NYSE:PBA), increasing it slightly from Cdn$62.00 to Cdn$63.00, while keeping a Neutral rating on the stock. The change follows Pembina's third-quarter adjusted EBITDA report, which fell short of expectations.
Pembina reported an adjusted EBITDA of Cdn$1,019 million for the third quarter of 2024, which was below the street median estimate of Cdn$1,057 million. Despite this miss, the company has narrowed its adjusted EBITDA forecast for 2024 to a range of Cdn$4.225 billion to Cdn$4.325 billion. This updated forecast compares to JPMorgan's own estimate of Cdn$4,296 million and the street median of Cdn$4,281 million.
During a conference call, Pembina reiterated its positive long-term outlook, emphasizing a projected growth rate of over 4% in conventional volume from exit-to-exit and an anticipated growth rate of 4-6% in 2025. However, the company also recognized a new challenge with the Cochin pipeline, where a revised tolling framework is expected to create a Cdn$30 million quarterly headwind.
The Cedar project remains a point of interest, with Pembina confirming customer engagement and noting that further updates on contracting are likely to be announced in 2025. In response to these developments, JPMorgan has updated its model and set a price target of Cdn$63 for December 2025.
In other recent news, Pembina Pipeline Corporation reported a record adjusted EBITDA of $1.019 billion in its Q3 2024 Results Conference Call, marking a strong performance across its operations. The company also revised its EBITDA guidance for 2024 to a range of $4.225 billion to $4.325 billion. The earnings for the quarter saw an 11% increase to $385 million, even with lower contributions from the Cochin pipeline and other transient events. Pembina's recent acquisitions and partnerships, alongside progress in major projects, were also highlighted. These developments include a 14.6% interest in Aux Sable and partnerships with White Cap and Veren.
The company anticipates a 4% to 6% volume growth in 2025, focusing on LNG Canada, new petrochemical facilities, and LPG export capacity expansion. Major projects such as the Northeast BC pump station expansion and Cedar LNG project are progressing well.
InvestingPro Insights
Pembina Pipeline Corp. (NYSE: PBA) presents a mixed picture for investors, as reflected in recent InvestingPro data and tips. The company's stock is currently trading near its 52-week high, with a robust year-to-date price total return of 28.41%. This performance aligns with the positive long-term outlook reiterated by Pembina during its recent conference call.
InvestingPro Tips highlight that Pembina has maintained dividend payments for 20 consecutive years, which may appeal to income-focused investors. The current dividend yield stands at an attractive 4.65%, potentially offsetting some concerns about the company's recent earnings miss.
However, it's worth noting that 5 analysts have revised their earnings downwards for the upcoming period, which could be related to the challenges mentioned in the article, such as the new headwind from the Cochin pipeline. Despite this, Pembina's P/E ratio of 18.37 suggests it's trading at a relatively low valuation compared to its near-term earnings growth potential.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Pembina Pipeline Corp., providing a deeper understanding of the company's financial health and market position.
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