On Monday, RBC Capital maintained its optimistic stance on shares of Energy Transfer (NYSE:ET), increasing the stock's price target to $23 from $20 while keeping an Outperform rating. The stock currently trades at $19.26, near its 52-week high of $20.02, having delivered impressive returns of over 51% year-to-date.
According to InvestingPro analysis, Energy Transfer appears fairly valued at current levels. The firm cited revised higher estimates and the potential for long-term growth as the driving factors behind the raised target.
Energy Transfer is anticipated to gain from an uptick in natural gas demand and a surge in natural gas liquids production, leveraging its comprehensive asset network. The company maintains a healthy dividend yield of 6.7% and has raised its dividend for three consecutive years, demonstrating strong financial discipline.
RBC Capital's updated forecast for Energy Transfer's financial performance reflects a positive outlook. The firm now predicts the company's Adjusted EBITDA to reach $15.560 billion in 2024, $16.320 billion in 2025, and $17.023 billion in 2026. These figures represent an increase from the previous estimates of $15.493 billion, $16.258 billion, and $16.925 billion, respectively.
Similarly, the projections for Distributable Cash Flow (DCF) have been adjusted, with the new estimates being $8.487 billion for 2024, $8.923 billion for 2025, and $9.608 billion for 2026, down from prior forecasts of $8.840 billion, $9.414 billion, and $10.077 billion.
The firm also revised its capital expenditure estimates for Energy Transfer's growth projects. The 2024 growth capital expenditure (capex) estimate has been reduced to $2.9 billion from the earlier projection of $3.1 billion.
Conversely, the capex estimates for 2025 and 2026 have been increased to $3.5 billion each, up from the previous $3 billion. This adjustment reflects the firm's expectation of additional growth initiatives that Energy Transfer is likely to undertake.
RBC Capital's analysis suggests that Energy Transfer stands out as a compelling investment opportunity due to its extensive asset base, robust free cash flow generation, and attractive distribution yield. The upward revision in the price target and the reaffirmation of the Outperform rating underscore the firm's confidence in Energy Transfer's financial strength and its strategic positioning within the energy sector.
With a P/E ratio of 14.06 and an overall Financial Health score of "GOOD" on InvestingPro, which offers 12 additional valuable insights about the company through its comprehensive Pro Research Report, investors can access deeper analysis to make informed decisions.
In other recent news, Sunoco LP, a significant entity in energy infrastructure and fuel distribution, has unveiled its financial and operational projections for the year 2025. The company, which reported an impressive $83.7 billion in revenue over the past year, has also announced its participation in the upcoming Mizuho (NYSE:MFG) Power, Energy & Infrastructure Conference.
However, Sunoco LP has emphasized that these forward-looking statements are subject to various risks and uncertainties.
In related news, Energy Transfer, the general partner of Sunoco LP, has been a point of interest for investors due to its recent financial performance and future prospects. The company's earnings have slightly exceeded expectations, as revealed in a conference call led by Tom Long.
Citi has maintained a buy rating for Energy Transfer and raised its price target to $20, reflecting an increase in free cash flow estimates and updates to the firm's financial model.
Furthermore, Energy Transfer is planning a $13-billion LNG-export facility in Louisiana, showing confidence in the incoming administration's more favorable regulatory environment. Citi analysts project a potential 13% return for Energy Transfer through 2029, based on an expected 5.5% compound annual growth rate in earnings per unit and a distribution yield of about 7.5%. These are among the recent developments for both Sunoco LP and Energy Transfer.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.