Bank of America Securities analyst Neel Mitra downgraded the rating for Equitrans Midstream Corp’s ETRN from Neutral to Underperform, while reducing the price target from $9.00 to $6.50.
The Analyst Thesis: The Pittsburgh, Pennsylvania-based company’s Mountain Valley Pipeline (MVP) is unlikely to come online before mid-2025, Mitra said.
The downgrade note was published on the heels of Sen. Joe Manchin‘s nixing plans to hasten the permitting process for energy projects as part of a government funding package. The West Virginia Democrat, who has lucrative ties to coal and energy companies, received bipartisan blame for complicating efforts to pass a spending bill before a Friday deadline.
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“As a result, we are embedding a higher cost of capital, especially considering the company’s leverage ratio is ~6x Net Debt/EBITDA (excluding deferred revenues), and can only meaningfully lower its leverage ratios is if MVP comes online,” Mitra wrote.
“And ETRN’s elevated debt levels create a risk to equity holders, as the company has flat EBITDA and at least $150 million in carrying costs, annually, to maintain MVP right of ways,” he added.
ETRN Price Action: Shares of Equitrans Midstream had declined by 8.71% to $7.12 at the time of writing Wednesday.
Image and article originally from www.benzinga.com. Read the original article here.