TC Energy Corp. (TRP.TO): Upgrade to Buy After Pullback - Focus on Gas Pipeline Backlog Execution, Growth Visibility, and Funding Flexibility

We upgrade TC Energy (TRP/TRP.TO) to Buy from Neutral. TC Energy is a large, high-quality energy infrastructure company with assets across the US, Canada, and Mexico. The stock has pulled back from its highs earlier this year on market concerns around the pace of gas/power demand growth and broader pressure on multiples from higher rates, but we see the selloff as overdone for three reasons. First, we expect TRP to announce further US natural gas pipeline projects over the coming quarters as it executes on its pre-FID backlog, with potential supplementing growth projects (albeit likely at more modest returns) on its Canada gas footprint. Second, we see increasing visibility into growth next decade, both from further gas pipeline projects and its large potential nuclear expansion project in Ontario. Third, we are more comfortable with TRP's funding outlook as better EBITDA growth has increased financial flexibility, supporting potentially higher capex levels. Our C$101/US$71 price targe