ETRN - Equitrans cut at BofA as permitting bill fails; 2025 startup now 'best case'

Equitrans Midstream ( NYSE: ETRN ) -4.7% to a two-month low in Wednesday's trading after Senator Joe Manchin pulled his energy permitting legislation after failing to win enough support, raising questions about the path forward for the company's Mountain Valley Pipeline project.

The move prompted Bank of America to downgrade Equitrans ( ETRN ) to Underperform from Neutral with a $6.50 price target, slashed from $9, "pricing in a lower chance that the Mountain Valley Pipeline comes online, and not before mid-2025, as a result of the failed Manchin permitting bill, which would have allowed a 2023 online date."

BofA's valuation based on distributable cash flow now assumes a 9% cost of capital vs. 8% previously, as beta likely will increase without a clear path for MVP approval, according to analyst Neel Mitra.

Manchin's bill did not allow MVP's three outstanding permits to be challenged individually, and the project could be challenged only in the D.C. circuit rather than the 4th circuit, where MVP has not had success, Mitra said in the downgrade.

Construction on the 303-mile MVP project has been stalled since a federal court in January rejected a permit to cross a national forest .

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