TRP: Extended 2028 Outlook And Project Execution Will Shape Future Performance

Analysts have nudged their fair value estimate for TC Energy up by C$0.50 to C$78.00, citing higher price targets and increased confidence in the company’s long term growth opportunities and project execution.

Analyst Commentary

Recent Street research reflects a generally constructive stance on TC Energy, with multiple firms lifting ratings and price targets in response to the company’s latest operating and financial updates.

Bullish Takeaways

• Bullish analysts highlight the confirmation of fiscal 2025 guidance and the extension of the company’s outlook to 2028 as evidence of greater visibility on long term cash flow and earnings growth.
• Higher price targets in the C$78 to C$84 range are being framed as recognition of TC Energy’s robust project pipeline and perceived upside to medium term targets as execution continues.
• The move to more positive ratings, including upgrades to Outperformer, is being linked to improved confidence that capital projects can be delivered largely on time and on budget, supporting valuation re rating.
• Some research suggests that, with major projects progressing and cost inflation moderating, the company’s risk reward profile is tilting more favorably toward growth and multiple expansion.

Bearish Takeaways

• Bearish analysts, or those taking a more neutral stance, point to the recent history of rating reversals as a sign that execution risk and regulatory uncertainty still warrant caution on how quickly valuation can rerate.
• There is concern that the stock’s rising price targets, now clustering around the high C$70s to low C$80s, may already discount a good portion of the expected improvement in earnings and returns.
• Some commentary emphasizes that while the opportunity set through the end of the decade appears robust, any delays, cost overruns, or macro headwinds could pressure free cash flow and limit upside to the current fair value range.
• Neutral views also reflect skepticism around the pace at which balance sheet metrics can improve given the capital intensity of the project backlog, which could constrain flexibility for further growth initiatives.

What's in the News

• TC Energy Corporation preferred shares were dropped from the S&P/TSX Preferred Share Index, potentially affecting demand from index-linked investors and passive funds (Index Constituent Drops).
• TC Energy plans to redeem all outstanding Cumulative Redeemable First Preferred Shares, Series 11, on November 28, 2025 at $25.00 per share. After this date, the shares will cease paying dividends and will be delisted from the Toronto Stock Exchange (Preferred Stock Buybacks).
• The company intends to use net proceeds from recently issued notes to fund the Series 11 preferred share redemption, reduce indebtedness, and support general corporate purposes. This indicates continued balance sheet management (Preferred Stock Buybacks).

Valuation Changes

• The fair value estimate has risen slightly to CA$78.00 from CA$77.50, reflecting marginally greater confidence in long-term cash generation.
• The discount rate has increased slightly to 6.56 percent from 6.55 percent, indicating a modestly higher required return in the valuation model.
• The revenue growth assumption is effectively unchanged at approximately 5.71 percent, signaling a stable outlook for top-line expansion.
• The net profit margin forecast remains essentially flat at about 25.28 percent, suggesting no material change to long-run profitability expectations.
• The future P/E multiple has risen slightly to about 21.6x from 21.4x, implying a modestly higher valuation multiple applied to forward earnings.