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On Wednesday, TD Cowen initiated coverage on TC Energy (NYSE:TRP:CN) (NYSE: TRP), a North American natural gas midstream and power infrastructure company with a market capitalization of $48.1 billion, assigning a Buy rating to the company's shares.
The firm set a price target of C$73.00, marking a new valuation for the company in the financial markets. According to InvestingPro data, the stock has shown strong momentum with a 33.5% price return over the past six months.
The move comes after TC Energy recently completed a spin-off of its liquids pipeline business, which has allowed the company to streamline its operations. According to TD Cowen, this strategic shift has positioned TC Energy to focus more effectively on its core segments of natural gas midstream and power infrastructure. InvestingPro analysis shows the company maintains robust financials with a gross profit margin of 64.9% and revenue growth of 11.2% over the last twelve months.
In a statement, TD Cowen highlighted the company's strong potential, noting, "Following the recent successful spin-off of its liquids pipeline business, TC has become a streamlined North American natural gas midstream and power infrastructure company, with a robust opportunity profile and competitive dividend yield (5.0%)." This aligns with InvestingPro data, which reveals TC Energy has maintained dividend payments for 52 consecutive years - one of several valuable insights available in the comprehensive Pro Research Report covering 1,400+ top stocks.
The analyst's optimistic outlook is underpinned by the belief that TC Energy's current business structure and assets offer a solid foundation for growth. The company's competitive dividend yield of 5.0% is also seen as an attractive feature for investors, providing a substantial income stream.
TC Energy's focus on natural gas midstream and power infrastructure is particularly relevant given the current energy landscape. With the demand for cleaner energy sources on the rise, TC Energy's operations are well-aligned with market trends, potentially offering long-term benefits to shareholders. Trading at a P/E ratio of 13.6, the stock currently appears overvalued according to InvestingPro's Fair Value model, though it generally trades with low price volatility.
In other recent news, TC Energy has been a focal point for analysts. BMO Capital Markets reaffirmed a Market Perform rating for TC Energy, adjusting the price target to C$70.00, up from C$66.00. This reflects a more optimistic view on the company's growth potential despite a tempered EBITDA growth forecast for 2024 to 2027. On the other hand, CFRA downgraded TC Energy from Hold to Sell, reducing the price target to $40. This decision was influenced by anticipated strain on operating cash flows due to funding growth projects and maintaining dividend payments.
In recent developments, TC Energy reported a 6% year-over-year increase in comparable EBITDA in its Q3 2024 earnings call. The company also successfully spun off its liquids pipelines business into South Bow and declared a quarterly dividend of $0.8225 per share.
TC Energy has been actively investing in its operations with CAD$7.0 billion worth of projects put into service in 2024 and an additional CAD$8.5 billion expected to come online in 2025. The Southeast Gateway project is also nearing completion with the in-service date expected by mid-2025.
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