What happened
Shares of Equitrans Midstream (ETRN +0.00%) are soaring in Tuesday's trading. The energy company's share price was up roughly 37.9% as of 10:30 a.m. ET, according to data from S&P Global Market Intelligence.
U.S. Democrats and Republicans have hammered out an initial deal to raise the debt ceiling, and it's arrived with provisions that stand to be a major bullish catalyst for Equitrans Midstream. As per the text of the proposed debt ceiling bill, necessary permits to complete the Mountain Valley Pipeline (MVP) would be approved -- opening the door for the company to have a substantial new revenue source. Following the news, Equitrans stock got a major price-target hike from RBC Capital.
So what
RBC published a note early this morning upgrading its rating on Equitrans Midstream stock from sector perform to outperform and raising its one-year price target on the stock from $7 per share to $10 per share. Following the pending debt ceiling bill, the investment firm expects that the market will assign a higher probability of the Mountain Valley Pipeline being online by 2024 and this will boost performance for the company.
NYSE: ETRN
Key Data Points
The completion of the MVP would open up a pipeline to transport natural gas from West Virginia to Virginia and stands to be a significant performance catalyst for Equitrans. However, RBC's analysts also cautioned that the stock could see volatile trading in conjunction with potential shifts in the language of the bill.
Now what
The U.S. House of Representatives Rules Committee will review the bill today before potentially moving it to a vote. Both Republican House Speaker Kevin McCarthy and Democratic President Joe Biden have said that they believe that the bill has enough votes lined up to pass.
Even prior to news about permits for the pipeline being included as part of the pending debt ceiling bill, there were signs of bipartisan support for its completion. The inclusion of provisions for completing the pipeline appear to have been primarily championed by West Virginia Sen. Joe Manchin, but the initiative had also previously received support from President Biden.
If the bill is passed as it currently stands with regard to MVP permitting, it would be a significant win for Equitrans.
