Analyst Note| Stephen Ellis |
Equitrans’ core business continued to perform well in the third quarter, despite the ongoing legal and permitting overhang from the Mountain Valley Pipeline, or MVP, project. We reiterate our view that this existing business, which generates between $1 billion to $1.1 billion in EBITDA annually, is worth at least $10 per share in the event of a MVP cancellation. Equitrans also has ample capacity to continue to fund its $0.60 per share dividend. After incorporating the latest MVP updates into our model, our $14 per share fair value estimate is unchanged, as is our narrow moat rating. Our fair value estimate is a 50/50 weighting of our $10 per share fair value in the case of a MVP cancellation, and a $17 fair value where we assume the MVP enters service. We continue to think investors are unfairly discounting the stock to well below what it would be worth if MVP were to fail, limiting downside for investors, in our view.