SOBO Stock Forecast & Price Target

South Bow Corp is positioned for growth, primarily supported by long-term contracted cash flows with investment-grade counterparties, which enhances its financial stability. Improvement in the market's perception of the Keystone Pipeline's physical asset integrity, particularly through a sustained incident-free performance, is anticipated to foster a premium valuation for the pipeline segment. Furthermore, the company's ongoing investments, such as the Blackrod Connection project, although temporarily increasing leverage, are expected to contribute positively to its growth trajectory in the energy infrastructure sector.

South Bow Corp's financial outlook is adversely affected by a projected 7.4% decrease in Q2/25 EBITDA, which is anticipated to drop to $246 million. Additionally, the Keystone Pipeline System experienced a decline in throughput to 613,000 b/d in Q1/25, reflecting an 8,000 b/d decrease from the previous quarter due to reduced uncommitted shipping volumes. Moreover, the company's lowered forecasts for 2025 and 2026 EBITDA and DCF/share are driven by weakened expectations for the Keystone segment and the expectation of hedge losses in the latter half of 2025.