Pembina Pipeline cut at Scotiabank with fewer catalysts seen in H2

Pembina Pipeline (PBA) down 0.4% in Tuesday's trading as Scotiabank downgrades shares to Sector Perform from Sector Outperform with a C$73 price target, seeing little room for multiple expansion following the stock's recent strong performance and valuation and with fewer potential catalysts in this year's H2.

Pembina (PBA) has sanctioned ~$6B of projects at attractive returns over the past year, while the long-term volume outlook across its asset base has improved and become more visible, which has contributed to a significant improvement in investor sentiment with the shares rising more than 40% over the last 12 months, Scotiabank analyst Robert Hope said.

"With fewer catalysts in the back half of the year, we see less room for multiple expansion beyond its recent trading level of 13.1x EV/2028E EBITDA," Hope wrote, and while acknowledging the market is increasingly recognizing growth from longer-dated projects such as Cedar LNG and Greenlight, Pembina (PBA) is now trading at the largest premium to its long-term average valuation within the pipeline and midstream peer group.