Analyst Actions: Magellan Midstream Partners Upgraded To Outperform, Target Raised $4 at Credit Suisse


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Credit Suisse says: "Longhorn Looking Better; Mgt Raises Guidance; UPGRADING to OUTPERFORM (from Neutral); Raising Ests & TP to $59 (from $55)"

Raise to Outperform; TP to $59: "We are raising our TP by $4, to $59, and maintaining our target yield range of 3.75%-4.0% with price range of $57-$61. We have raised our distribution growth forecast and consequently believe that investors likely bid down the yield further. We believe that MMP has NTM total return potential of 14%-21%, which justifies an Outperform rating from Neutral."

Longhorn Looking Even Better: "MMP announced that it has allocated 10% of the capacity on Longhorn for spot market shipments which has been oversubscribed. MMP is also considering adding an add'l 50 kbpd capacity which would only cost $80mm and we estimate would add $30mm EBITDA. We are raising our FY2014 EBITDA forecast by $31mm to reflect this "potential" project as well as the recently announced $190mm P/L acquisition from PAA."

Raising Distribution Growth Outlook: "We are raising our 3-year distribution growth outlook from 11% to 12%, as we believe that the accretion from the Longhorn expansion could facilitate accelerated growth as MMP already had solid coverage ratios."

MMP Raised FY2013 DCF Guidance: "MMP raised its guidance for FY2013 DCF by $10mm to $580mm. We had thought MMP's previous guidance was low and we are raising our forecast by $8mm to $592mm to account for accretion from the recent $190mm refined pipeline acquisition from Plains. We are raising our FY2013 EBITDA forecast by $10mm, to $790mm. We are raising our 2013/2014/2015 EPU estimates to $2.33/$2.64/$2.96 from $2.21/$2.50/$2.80 respectively."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Commodities

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