BMO analyst previews profit results, provides top picks in the yield-heavy energy infrastructure sector

BMO Capital Markets analyst Ben Pham previewed earnings results in the income-heavy energy infrastructure sector,

“Q1/24 earnings season kicks off on April 29 with GEI. We have made estimate changes to more than 70 per cent of our coverage and generally expect more ‘in-line/beats’ over ‘misses’ but the magnitude of surprises will probably be contained. Following our analysis of public data sources, proprietary models, and detailed discussions with our coverage, we point to notable potential Q1/24 beats from PPL , ALA , and NPI , and potential quarterly misses from GEI , EMA , and BEP .

“Following 18 months of underperformance, stars are aligning again for the TSX. Our Canada Cycle Indicator is now in a clear upturn, improving from the bottom in November 2023. Rising Leading Indicators and commodity prices were the biggest drivers of the uptick. The CCI has been a reliable coincident indicator for the TSX vs. SPX, especially in recent history . The upturn suggests the TSX could recover from deep underperformance vs. the S&P 500.

“The TSX Q1/24 reporting season unofficially starts next week with 26 companies reporting. Overall, Q1/24 EPS are slated to drop back down to $329 , at the low end of the three-year range. Nevertheless, we believe there is high beat potential, mostly from the resource space where commodity prices exceeding sell-side estimates are still not fully reflected in consensus numbers.

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