We maintain our Outperform recommendation for Spectra Energy Corp. (SE) shares following better-than-expected third quarter 2011 results. The outperformance was driven by strong growth from expansion projects, higher commodity prices and a stronger Canadian dollar.
With third-quarter results showing an improvement, management remains optimistic about the company’s performance going forward and looks to deliver or exceed its full-year earnings per share forecast of $1.65. It also remains focused on investing more than $5 billion in expansion capital over the next five years.
With a market-leading position and strong investment opportunities, we expect Spectra to sustain its growth momentum. Our $35 price objective reflects a 2012 P/E multiple of 18.4x, which is trading at the upper end of the historical range.
