DCP Midstream Upgraded to Outperform at RBC Capital
RBC Capital upgraded DCP Midstream, LP (NYSE:DCP) to outperform from sector perform and increased their price target to $40 from $37, viewing the selloff (units down 26% since recent peak on 06/07/2022) as overdone given the company’s cash flow visibility.
The analysts noted that approximately 70% of the company’s 2022 earnings are fee based and the company has hedged 42% of its commodity price exposure leading to 83% fee-based and hedged earnings. For 2023, the company has hedged 16% of its commodity price exposure. The company’s hedges provide downside protection while preserving the ability to capture some upside.
The analysts expects a rebound in commodity prices. They recently raised their 2022/2023 WTI price forecast by 7%/18%, Henry Hub gas price forecast by 13%/9% and Mont Belvieu NGL price forecast by 0%/18%. The analysts highlighted that the company estimates annual margin impact of $3 million for every $1/Bbl change in WTI prices, $2 million for every $0.10/MMBtu change in natural gas prices and $5 million for every $0.01/gallon change in NGL prices for 2022.
| Symbol | Price | %chg |
|---|---|---|
| TGNO4.BA | 2780 | -2.52 |
| TRNFP.ME | 1399.6 | -0.37 |
| ET-PE | 81.4286 | 0 |
| ENB-PA.TO | 23.65 | 0 |
DCP Midstream Upgraded to Outperform at RBC Capital
RBC Capital upgraded DCP Midstream, LP (NYSE:DCP) to outperform from sector perform and increased their price target to $40 from $37, viewing the selloff (units down 26% since recent peak on 06/07/2022) as overdone given the company’s cash flow visibility.
The analysts noted that approximately 70% of the company’s 2022 earnings are fee based and the company has hedged 42% of its commodity price exposure leading to 83% fee-based and hedged earnings. For 2023, the company has hedged 16% of its commodity price exposure. The company’s hedges provide downside protection while preserving the ability to capture some upside.
The analysts expects a rebound in commodity prices. They recently raised their 2022/2023 WTI price forecast by 7%/18%, Henry Hub gas price forecast by 13%/9% and Mont Belvieu NGL price forecast by 0%/18%. The analysts highlighted that the company estimates annual margin impact of $3 million for every $1/Bbl change in WTI prices, $2 million for every $0.10/MMBtu change in natural gas prices and $5 million for every $0.01/gallon change in NGL prices for 2022.
