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CIBC Downgrades TransCanada (TRP) To 'Sector Performer', Says Q1 Softness To Impact Year

 April 30, 2012 09:51 AM
 


(By Balachander) TransCanada Corp. (TSX:TRP.TO) (NYSE: TRP) shares were downgraded to "Sector Performer" from "Sector Outperformer" by CIBC World Markets analyst Paul Lechem, given few short-term catalysts and lower earnings forecast.

The analyst noted that TransCanada reported first-quarter EPS of $0.52, slightly below his $0.53/consensus $0.54 estimates, and down y/y vs. $0.61. The main issues were lower natural gas volumes through the U.S. pipelines, no incentive earnings on the Mainline, lower power prices, and the ongoing planned outage at Bruce, he said.

"These issues should persist through 2012, with natural gas volumes and power prices expected to remain relatively soft. The Bruce refurbishment should be completed by late-Q2/12 (Unit 2)/mid-Q3/12 (Unit 1), but could have a material impact on earnings until fully back in service," Lechem wrote in a note.

[Related -An Investor's Guide To The Keystone XL Pipeline Saga]

Lechem, who trimmed price target on the stock to $45 from $46, lowered 2012 EPS estimate for the company to $2.21 from $2.34 and 2013 EPS estimate to $2.36 from $2.45.

TransCanada is a North American energy infrastructure company operating in natural gas pipelines, oil pipelines and energy segments.

TRP.TO fell 0.44 percent to trade at $43.00 on the Toronto Stock Exchange. The stock fell 1.02 percent to trade at $43.61 on the NYSE on Monday.

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