Analyst flags upside on Enbridge/Spectra

Bay Street is likely underestimating the earnings potential of the combined Enbridge Inc. and Spectra Energy Corp. pipeline giant, at least according to one analyst. CIBC World Markets analyst Robert Catellier, in a Tuesday research note, said the proxy statement for the $37-billion deal indicates there is more upside in the combined pipeline giant than analysts expect. He has a 12- to 18-month price target of $71 on Enbridge shares, which were trading at $56.83 at midday Tuesday. Catellier noted prospective financial information shows 2018 cash flow projections are 18 per cent higher than what analysts expect, so “it appears to us that there is a healthy discount between estimates and company projections.” The proxy statement also shows Spectra Energy pushed for an all-stock transaction and showed “considerable confidence” in the dividend growth of the company following the mega merger, Catellier said, while Enbridge initially offered a combination of stock and cash.