Keyera Corp.’s Strategic Acquisition and Growth Potential Justify Buy Rating

In a report released today, Benjamin Pham from BMO Capital upgraded Keyera Corp. (KEY – Research Report) to a Buy, with a price target of C$54.00.

Benjamin Pham has given his Buy rating due to a combination of factors including Keyera Corp.’s recent strategic acquisition and its potential for significant growth. The acquisition of Plains NGL is seen as a transformative move, enhancing Keyera’s scale and expanding its footprint in North America, which is expected to increase the company’s fee-based adjusted EBITDA by approximately 50%. This acquisition also diversifies Keyera’s cash flows and supports dividend sustainability, with a projected fee-based growth of 7-8% through 2027.
Another reason for the Buy rating is the attractive valuation of Keyera compared to its peers, with a pro forma valuation of about 9.5x 2026 estimated EV/EBITDA, which is lower than the peer average. Additionally, the acquisition is expected to be significantly accretive, with a projected increase in distributable cash flow per share in the mid-teens for the first full year of operations. The deal is fully funded through a combination of equity and debt, maintaining Keyera’s investment-grade ratings. Pham’s analysis suggests a potential total return of over 30%, making it an opportune time to accumulate shares.

According to TipRanks, Pham is a 5-star analyst with an average return of 8.5% and a 68.11% success rate. Pham covers the Utilities sector, focusing on stocks such as TransAlta, Capital Power, and Algonquin Power & Utilities.

In another report released on June 10, CIBC also reiterated a Buy rating on the stock with a C$47.00 price target.