TC PipeLines Beats Expectations

TC PipeLines (TCLP - Analyst Report) reported better-than-expected 4th quarter 2008 results, primarily reflecting improved Tuscarora transmission results and lower financial charges. Given its lack of exposure to the tentative near-term natural gas market fundamentals, Tuscarora provides the partnership with cash flow visibility going forward.

The partnership maintained its 4th-quarter cash distribution at $0.705 per unit (or $2.82 per unit annualized). We continue to like the partnership for its steady cash-flow generating pipeline assets that provide it with the stability and financial capacity to deliver cash distributions in a disciplined manner.

We believe that the potential addition of quality assets over the next few quarters from its general partner is another positive for the partnership. Our recommendation is a Buy with a $30 12-month target price.

Read the analyst note on TCLP