Tuesday, Gibson Energy (TSX:GEI)'s stock price target was increased by BMO (TSX:BMO) Capital Markets to Cdn$25.00 from Cdn$22.50, while the Market Perform rating was retained. The adjustment follows the company's first-quarter earnings report, which, according to the firm, suggests a favorable re-contracting outcome at its Gateway terminal.
The analyst from BMO Capital Markets highlighted Gibson Energy's record volumes at Gateway and a solid commodity market as key factors for the revised price target. The firm's optimism is based on recent management discussions and the Q1/24 performance, indicating that the company is well-positioned for positive developments in its contract renewals.
In their commentary, BMO Capital Markets noted the robust commodity backdrop and record volumes achieved at Gateway as the basis for increasing the target valuation multiple to 10 times EBITDA from the previous 9.5 times. This valuation adjustment is what led to the new Cdn$25.00 price target.
The company's financial performance in the first quarter of 2024 has provided a strong foundation for the positive outlook. The analyst's comments reflect confidence in Gibson Energy's operational strength and market conditions that support the company's growth trajectory.
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