Energy Transfer (ET.US) was rated “outperforming the market” by Scotiabank! Capital expenditure supports profit growth, and the potential increase in stock prices reaches 30%

The Zhitong Finance App learned that Scotiabank Canada first gave US pipeline transportation giant Energy Transfer (ET.US) a “outperforming market” rating on Tuesday, with a target price of 23 US dollars. This target price has room for an increase of nearly 30% from the stock's closing price of $17.7 on Tuesday. According to the bank, the company has a “large and integrated asset base, covering every link in the midstream value chain, and has truly formed a wellhead-to-water (wellhead-to-water) investment portfolio” and is involved in all major hydrocarbon streams at different links.

Scotiabank analyst Brandon Bingham said he believes Energy Transfer has considerable upward potential, mainly benefiting from continued profit growth driven by short-term and future thematic demand.

In the 2026-2028 fiscal year, a relatively stable average capital expenditure growth of about $4.9 billion supported expected profit growth and created above average free cash flow. Analysts believe that the company's current free cash flow yield is around 5% and is expected to rise to about 10% by the 2028 fiscal year, while the average of peer companies as of August 27 is about 6%. He pointed out, “The 'dual combination' of short-term physical growth and thematic growth should drive Energy Transfer's valuation to narrow compared to peers.”

Analysts also said that Energy Transfer is highly active in mergers and acquisitions and has always maintained a high spending intention, which has kept the company's stock price relatively undervalued for a long time. Furthermore, its complex corporate structure and, to a lesser extent, a complex capital structure further hampered valuation. Although the discount has not been removed, the analyst believes that the current valuation level is unreasonable. He expects that the discount compared to peers will not completely disappear, but it will narrow to a more reasonable range than the current one.