TC Energy Earnings: Good Progress on Coastal GasLink and New Asset Sales

TC Energy’s third-quarter earnings were solid, in our view. After updating our model, our CAD 63 fair value estimate is unchanged, while our U.S. fair value falls $1 to $46 per share due to updated exchange rates. Our narrow moat rating is unchanged. Broadly, we think the firm is making good progress in several areas, including the mechanical completion of Coastal GasLink while maintaining its budget at CAD 14.5 billion, addressing an incremental CAD 3 billion in asset sales, and progressing on the planned 2024 liquids spinoff. Management guided 2023 EBITDA toward the top end of its guided 5%-7% increase over 2022 levels, primarily due to healthy volumes, however, our model had already assumed a strong forecast. We would expect a more fulsome update at its analyst day on Nov. 28, as management deferred more extensive 2024 commentary on the call to its expected detailed presentation.