Enbridge Still a 'Buy' After Pipeline Explosion

After announcing late Wednesday that an explosion occurred on part of its U.S.- Canada crude oil transmission mainline in Minnesota, shares of Enbridge Inc. (ENB) may be volatile in early trading. However, Desjardins Securities analyst Daniel Shteyn said the company does not bear volumetric risk for the Enbridge System under the terms of its regulatory framework.

He estimates that less than C$5-million of incentive earnings, or $0.01 in earnings per share, could be at risk as a result of the explosion that killed two workers, and led to the shutdown of additional pipelines nearby.

Mr. Shteyn expects the limited earnings impact will mitigate some of the pressure on the stock, and he continues to rate Enbridge a “buy” with a C$44.50 price target.