On Friday, April 4, 2025, Citi initiated coverage on Enbridge Inc. (NYSE:ENB:CN) with a positive outlook, issuing a Buy rating and setting a price target of Cdn$75.00. This marks a significant endorsement for the $98.8 billion market cap energy giant, highlighting its diversified energy portfolio as a key advantage in the competitive energy sector.
Currently, Enbridge's stock is trading near its 52-week high of $46.12, reflecting a remarkable 35.75% return over the past year. According to Citi analysts, Enbridge is uniquely positioned to capitalize on the growing global energy demand through its comprehensive mix of liquids, gas, and renewable energy operations. The firm emphasized that Enbridge has consistently outpaced global energy demand growth by 400 basis points, a trend they expect to continue.
As a prominent player in the Oil, Gas & Consumable Fuels industry, Enbridge has maintained dividend payments for an impressive 53 consecutive years, boasting a current dividend yield of 5.85%. The analysts pointed out that secular trends favoring natural gas and power are expected to support 80% of Enbridge’s capital project backlog, which is projected to drive 90% of the company’s near-term growth.
Enbridge’s liquids business plays a vital role in this growth, contributing over 70% of the company’s free cash flow (FCF), despite accounting for only 50% of its EBITDA. The company’s financial strength is evident in its last twelve months (LTM) EBITDA of $10.57 billion and revenue growth of 22.51%. With earnings and stock volatility ranking among the lowest in the midstream sector, Enbridge presents a low-risk investment profile. This characteristic, combined with the company’s broad energy platform, suggests it could provide investors with a higher return per unit of risk.
The Buy rating and the C$75.00 price target reflect Citi’s confidence in Enbridge’s ability to capitalize on the energy sector’s expansion and its strategic positioning across various energy markets. Moreover, Enbridge has been active in recent developments, confirming a final investment decision to proceed with the Traverse Pipeline project in collaboration with WhiteWater, MPLX LP, and Targa Resources Corp. This pipeline, spanning 160 miles, is designed to transport up to 1.75 billion cubic feet of natural gas daily and is expected to be operational by 2027.
Enbridge also announced its 2025 Annual Meeting of Shareholders, where Steven W. Williams is set to become the new Chair of the Board, succeeding Pamela L. Carter. In addition to Citi’s endorsement, BMO Capital Markets has maintained its Market Perform rating on Enbridge, emphasizing the company’s robust business strategy and growth potential. With Cdn$29 billion in secured projects and another Cdn$50 billion under evaluation, Enbridge is well-positioned for future growth.
On the trading front, Enbridge ended the session on Thursday, April 3, 2025, at $45.34, demonstrating a +0.44% swing from the preceding day's closing price. The shares witnessed a gain of 6.24% over the previous month, outperforming the Oils-Energy sector's gain of 3.42% and the S&P 500's loss of 4.7%. Investors are eagerly awaiting the company’s upcoming earnings report, scheduled for May 9, 2025, where it is forecasted to report an EPS of $0.64, showcasing a 5.88% downward movement from the corresponding quarter of the prior year.
The consensus estimate for quarterly revenue stands at $9.08 billion, reflecting a 10.9% increase from the year-ago period. Looking at the full year, analysts expect earnings of $2.13 per share and revenue of $33.14 billion, which would mark changes of +6.5% and -14.96%, respectively, from last year. Over the past month, the Zacks Consensus EPS estimate has moved 0.59% higher, indicating a positive trend in analyst expectations.
Enbridge currently holds a Zacks Rank #3 (Hold) and is being traded at a Forward P/E ratio of 21.16, which denotes a premium relative to the industry's average Forward P/E of 17.25. Additionally, the stock trades at a PEG ratio of 4.23, compared to the Oil and Gas - Production and Pipelines industry’s average PEG ratio of 2.92. This suggests that while Enbridge is positioned for growth, it may be valued higher than some of its peers.
As the market closed on April 3, 2025, the Oil and Gas - Production and Pipelines industry was ranked 43 in the Zacks Industry Rank, placing it in the top 18% of all 250+ industries. This ranking reflects the industry's overall strength and potential for future performance. Investors are advised to monitor any changes in analyst estimates for Enbridge, as these revisions can indicate shifting business trends and impact share prices.
In summary, with Citi’s bullish rating and price target, along with ongoing strategic developments and a solid financial foundation, Enbridge appears to be a compelling investment opportunity in the energy sector. As it navigates through market conditions and capitalizes on growth opportunities, the company is poised to maintain its status as a leader in the energy landscape.
