Goldman Sachs resumes Enbridge stock coverage with neutral rating

Goldman Sachs has returned to covering Enbridge Inc., assigning it a Neutral rating with a price target of C$71.00. The bank sees Enbridge as a significant energy infrastructure company operating in North America. Enbridge's stock has fallen 3% year-to-date, trailing the 18% growth of the AMNA index. Currently trading around $46.49, the stock is near its 52-week low of $45.02. Despite this, Enbridge has raised its dividend for 23 consecutive years, providing a 6% yield that may attract income-seeking investors.

The investment bank anticipates growth in Enbridge's Western Canadian crude pipeline network due to increased basin production. However, it notes growing competition from third-party pipeline capacity additions. Goldman Sachs faces moderate risks related to tariff rates and the company's capacity to maintain its rate base. While they view Enbridge's U.S. gas pipeline network favorably, driven by increasing power and LNG demand, the firm cautions that Enbridge's gas mix is less diversified compared to its peers.

With a 13x EBITDA multiple projected for 2027, Goldman Sachs' C$71 target suggests an 11.5x multiple on 2030 estimates. This valuation implies Enbridge can achieve approximately 5% EBITDA compound annual growth through 2030, slightly below the consensus but still positive. Goldman Sachs cautions that Enbridge's balance sheet is relatively constrained, limiting its flexibility to allocate capital.

Recent developments include Enbridge's initiation of an open season for its proposed West Texas Express natural gas pipeline, aimed at transporting gas from Waha, Texas, to El Paso markets. The company also plans to acquire Tallgrass Crude Oil Transportation for $2.55 billion and Salt Creek Crude Gathering assets for $0.6 billion by 2026.

Other analysts, such as National Bank Financial and BMO Capital, have likewise upgraded their ratings on Enbridge, citing strong growth potential and low commodity price exposure. Raymond James has likewise raised its price target for Enbridge to Cdn$80.00, citing recent acquisitions' impact on the company's enterprise value. These strategic moves and positive analyst sentiment reflect Enbridge's position in the evolving energy sector.