On Wednesday, BMO Capital Markets updated its view on Keyera Corp . (TSX:KEY:CN) (OTC: KEYUF), a company operating within the energy sector's midstream segment. The firm raised the price target to Cdn$45.50, up from the previous Cdn$44.00, while keeping a Market Perform rating on the stock. The adjustment reflects the analyst's optimism about the company's growth prospects and financial strategy.
The analyst from BMO Capital Markets highlighted Keyera's 2025 guidance and the expected compound annual growth rate (CAGR) in EBITDA as indicators of the company's robust integrated midstream platform. As Keyera continues to see its gas processing plants benefit from increased Western Canadian Sedimentary Basin (WCSB) volumes, there is an anticipated positive effect on the company's transportation, storage, fractionation, and marketing services, particularly through the Key Access Pipeline System (KAPS).
Moreover, the firm's strong balance sheet was noted as a positive factor, providing Keyera with the ability to self-fund its growth initiatives. This financial stability also leaves room for potential dividend increases and the opportunity for modest, opportunistic share buy-backs, which could further benefit shareholders.
The raised price target is also based on a higher target valuation multiple, moving to 11.5x EBITDA from the previous 11.0x. This adjustment comes as a result of the higher-than-expected growth projections for Keyera.
The Market Perform rating was maintained due to Keyera's recent trading levels and relative performance, suggesting that while the company is on a positive trajectory, it is currently valued appropriately in the market.
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