TC Energy Corp (TRP:CA)
Jefferies marginally increased its 12-month target price on TC Energy Corp, to $74 from $73, following a reassessment of the company’s cash flow growth outlook and improved balance sheet trajectory. The analyst reaffirmed the “Hold: stance, noting that while TC Energy remains a cornerstone in North American energy infrastructure, the near-term investment case is tempered by leverage constraints and a slower-than-anticipated pace of portfolio optimization.
The analysts highlighted TC Energy’s diversified asset base, encompassing over 90,000 km of natural gas pipelines, liquids transport, and power generation infrastructure, as a key underpinning of long-term stability and earnings visibility. The company’s strategic focus on natural gas transmission, particularly in high-demand corridors serving U.S. and Canadian markets which is expected to provide durable, inflation-protected cash flows supported by regulated returns and long-term contracts.
Jefferies acknowledged that management’s asset divestiture program, aimed at reducing debt and improving the company’s credit profile, has progressed more slowly than expected due to challenging capital market conditions and valuation gaps for non-core assets. Nevertheless, recent sales and debt repayment initiatives have contributed to a modest improvement in financing flexibility, easing near-term refinancing risk and interest expense pressure.
TC Energy continues to advance key growth projects, including the NGTL system expansion and the Coastal GasLink pipeline completion, which are projected to support incremental EBITDA growth beginning in 2025. Jefferies noted that once these projects are fully commissioned, the company should benefit from a more balanced capital structure and reduced execution risk.
The revised C$74 target price incorporates slightly higher free cash flow estimates and a lower cost of capital assumption, reflecting declining rate pressures and stabilized energy prices. However, the firm maintained its Hold rating, citing limited upside potential relative to peers, ongoing regulatory and cost challenges, and a valuation that already reflects medium-term growth prospects.
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