South Bow Corp: Hold Rating Amid Strong Q4/24 Results and Uncertain 2025 Guidance

Analyst Benjamin Pham of BMO Capital maintained a Hold rating on South Bow Corp (SOBO – Research Report), with a price target of C$36.00.

Benjamin Pham has given his Hold rating due to a combination of factors that include South Bow Corp’s recent performance and future projections. The company’s inaugural Q4/24 results exceeded expectations, showcasing a robust business model with strong EBITDA and earnings per share figures. However, the guidance for 2025 fell short of market expectations, with projected EBITDA and cash flow figures lower than consensus estimates.
Despite the attractive dividend yield of approximately 7.3%, which is higher than peers, the anticipated growth rate lags behind industry standards, and the company’s cash flow diversity is limited. Additionally, the balance sheet shows relatively high leverage, which could pose risks. While there is potential for growth through projects like the Big Sky oil pipeline, the details are still uncertain, making it premature to factor them into the stock’s valuation. As a result, the stock is rated as Market Perform, reflecting a balanced view of its potential risks and rewards.

In another report released today, Scotiabank also maintained a Hold rating on the stock with a $26.00 price target.