On Friday, BMO (TSX:BMO) Capital Markets adjusted its price target for Pembina Pipeline Corp . (PPL (NYSE:PPL):CN) (NYSE: NYSE:PBA), reducing it to Cdn$59.00 from the previous Cdn$61.00. Despite the adjustment, the firm maintained an Outperform rating on the stock. According to InvestingPro data, the company currently offers a robust 5.03% dividend yield and has maintained dividend payments for 20 consecutive years.
The revision comes as the analyst noted long-term growth prospects for Pembina Pipeline (TSX:PPL), citing a 4-6% fee-based adjusted EBITDA per share growth through 2026. The valuation relative to peers was also highlighted as attractive, with Pembina's EBITDA trading around 11 times compared to KEY and ENB/TRP, which trade at approximately 11.5 and 12 times, respectively. InvestingPro analysis reveals the stock is trading at a P/E ratio of 16.56x, which appears favorable relative to its near-term earnings growth potential. Get access to 8 more exclusive ProTips and comprehensive valuation metrics with InvestingPro.
However, the decision to adjust the price target was influenced by a softer-than-expected EBITDA guidance for 2025, which was about 3% below the consensus. Additionally, there are concerns that the Canada Energy Regulator's (CER) review of Alliance tolls may put pressure on the company's shares in the near term, especially after a recent unfavorable recontracting outcome on the Cochin pipeline. Despite these challenges, the company has demonstrated strong revenue growth of 37.18% over the last twelve months, with five analysts recently revising their earnings expectations downward.
The analyst also mentioned that Pembina Pipeline would no longer be included in BMO's Top 5 Best Ideas roster. This shift reflects the analyst's view on the potential headwinds facing the company, despite the overall positive outlook on Pembina's performance.
Pembina Pipeline Corp. operates a system of pipelines that transport crude oil, natural gas, and natural gas liquids across North America. The company also provides midstream and gas gathering services.
In other recent news, Pembina Pipeline Corporation projected its adjusted EBITDA for 2025 to range between $4.2 billion and $4.5 billion. This forecast reflects anticipated growth across the Western Canadian Sedimentary Basin, new assets, and the full-year effect of the Alliance and Aux Sable asset consolidation.
Pembina's capital investment program for 2025 is set at $1.1 billion, allocated to ongoing construction of previously sanctioned projects, and development spending on potential future projects. The company also appointed Mr. Alister Cowan to the board of directors, bringing over two decades of experience in the energy sector.
In terms of analyst notes, JPMorgan (NYSE:JPM) adjusted the price target for Pembina Pipeline Corp. from Cdn$62.00 to Cdn$63.00, following the company's third-quarter adjusted EBITDA report. Meanwhile, RBC (TSX:RY) Capital Markets highlighted PG&E Corp. and Williams Companies (NYSE:WMB), Inc in its top sector picks, both maintaining an "Outperform" rating.
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