J.P. Morgan Downgrades Enbridge and ONEOK Ratings
Written by Emily J. Thompson, Senior Investment Analyst
Source: seekingalpha
- Rating Downgrade: J.P. Morgan downgraded Enbridge (ENB) and ONEOK (OKE) from Overweight to Neutral with price targets of C$69 and US$83, reflecting concerns over how a softer macro environment impacts growth prospects for both companies.
- Cash Flow Stability: While Enbridge's 98% take-or-pay regulated cash flows provide nearly unmatched stability, the crude oil segment's growth prospects are threatened, particularly with the emerging competitive pressure from Venezuela.
- EBITDA Contribution Analysis: The analyst noted that despite Enbridge's diversified platform and significant scale, the crude oil segment only drives about 35% of the company's EBITDA, making it increasingly challenging to maintain competitive per-share growth over time.
- ONEOK's Underperformance: ONEOK's recent results fell short of EBITDA guidance, and the analyst believes that improved sentiment on ONEOK's stock may require higher oil prices to bolster investor views on the company's non-Permian liquids-rich drilling portfolio.
Analyst Views on ENB
Wall Street analysts forecast ENB stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for ENB is 49.75 USD with a low forecast of 44.63 USD and a high forecast of 51.83 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
11 Analyst Rating
5 Buy
6 Hold
0 Sell
Moderate Buy
Current: 48.020
Low
44.63
Averages
49.75
High
51.83
Current: 48.020
Low
44.63
Averages
49.75
High
51.83
About ENB
Enbridge Inc. is an energy transportation and distribution company. The Company's segments include Liquids Pipelines, Gas Transmission, Gas Distribution and Storage, and Renewable Power Generation. Liquids Pipelines consists of pipelines and terminals in Canada and United States that transport and export various grades of crude oil and other liquid hydrocarbons, including the Mainline System, Regional Oil Sands System, Gulf Coast and Mid-Continent, and Other. Gas Transmission consists of its investments in natural gas pipelines and gathering and processing facilities in Canada and United States, including United States Gas Transmission, Canadian Gas Transmission, United States Midstream, and Other. Gas Distribution and Storage consists of its rate-regulated natural gas utility operations in Canada and United States. Renewable Power Generation consists primarily of investments in wind and solar assets, as well as equity interests in geothermal power and power transmission assets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
