As Manchin energy bill fails, Equitrans mid-level analyst warns of risky debt levels
Bank of America Securities analyst Neel Mitra downgraded Equitrans Midstream Corp's ETRN rating from Neutral to Underperforming, while cutting the price target from $9.00 to $6.50.
Analyst Dissertation: The Pittsburgh, Pa.-based company's Mountain Valley Pipeline (MVP) is unlikely to be in service until mid-2025, said Mitra.
The downgrading memo was released on the heels of Sen. Joe Manchin's denial plans to speed up the process of approving energy projects under a government funding program. The West Virginia Democrat, who has lucrative ties to coal and energy companies, has been blamed by both parties for complicating efforts to pass a spending bill before Friday's deadline.
View other analyst stock ratings
"As a result, we factor in a higher cost of capital, especially since the company's debt ratio is around 6x net debt/EBITDA (excluding deferred income), and can only significantly reduce his debt ratios if MVP is in line," Mitra wrote.
"And ETRN's high debt levels create shareholder risk, as the company has stable EBITDA and at least $150 million in carry costs, per year, to maintain the grips of the MVP," he added. .
ETRN Price Action: Equitrans Midstream shares were down 8.71% at $7.12 at Wednesday's writing.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Bank of America Securities analyst Neel Mitra downgraded Equitrans Midstream Corp's ETRN rating from Neutral to Underperforming, while cutting the price target from $9.00 to $6.50.
Analyst Dissertation: The Pittsburgh, Pa.-based company's Mountain Valley Pipeline (MVP) is unlikely to be in service until mid-2025, said Mitra.
The downgrading memo was released on the heels of Sen. Joe Manchin's denial plans to speed up the process of approving energy projects under a government funding program. The West Virginia Democrat, who has lucrative ties to coal and energy companies, has been blamed by both parties for complicating efforts to pass a spending bill before Friday's deadline.
View other analyst stock ratings
"As a result, we factor in a higher cost of capital, especially since the company's debt ratio is around 6x net debt/EBITDA (excluding deferred income), and can only significantly reduce his debt ratios if MVP is in line," Mitra wrote.
"And ETRN's high debt levels create shareholder risk, as the company has stable EBITDA and at least $150 million in carry costs, per year, to maintain the grips of the MVP," he added. .
ETRN Price Action: Equitrans Midstream shares were down 8.71% at $7.12 at Wednesday's writing.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
What's Your Reaction?
