02.24
TransCanada Corp. (TRP) – $34.93 – Long-Term Outlook Intact
Outperform, Average Risk, Price Target: $41.00
Normalized Q4/09 EPS was $0.48 compared to RBC CM estimate of $0.52 and $0.46 in Q4/08. Lower than forecast Power contribution (mostly realized prices) was partially offset by lower-than-expected interest expense. TRP raised its annual dividend by $0.08/share to a new annualized rate of $1.60/share, which is in line with RBC CM’s estimate. After reviewing its financial forecast, RBC CM modestly reduced its EPS estimates for 2010 and 2011 to $2.09 and $2.40, respectively (from $2.12 and $2.45, respectively). On an absolute basis and also relative to the level of 10-year GoC bond yield, RBC CM believes that the shares of TRP represent good value trading at current levels.
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