Analyst Note| Stephen Ellis |
TC Energy’s 2022 investor day was more disappointing than not, as it revealed that the high-profile Coastal GasLink project will see another round of higher costs in 2023. The firm last updated its estimates in July 2022 when costs for the troubled project nearly doubled to CAD 11.2 billion from CAD 6.6 billion. Prior cost increases have been due primarily to COVID-19 delays, weather, and lost productivity. We now model a cost of CAD 12.2 billion, but TC Energy will provide a new estimate next year. After updating our model, we’ve lowered our fair value estimates to CAD 65 and $48 from CAD 68 and $50. Our narrow moat rating remains unchanged.