Analyst Actions: MarkWest Energy Partners Raised To Outperform, Target Lifted $16 at Credit Suisse; Shrs Hit Fresh Yr Highs


Credit Suisse says: Raising TP to $73 (from $57) and Rating to OUTPERFORM (from Neutral) On 1Q Beat, Accretive Acq, Raised Distr Growth in 2014+; Revising Ests

Upgrading to Outperform (from Neutral) on Valuation Rising Outlook: "MWE reported 1Q results that handily beat CS and consensus estimates and narrowed guidance for 2013 lower to $500-$540mm in DCF from $500-$575mm. While we are raising our DCF estimate for 2013 to the low end of the range, we are also raising our TP by $16, to $73/unit, based on three stage DDM applying 10% distribution growth for five years, 4% for five years, 1.5% terminal growth rate and a 9% discount rate. Total return goes to 15-20%, taking us back to Outperform relative to our sector. We are revising our 2013/2014/2015 EPU estimates to $0.63/42.59/$3.04 (from $0.97/$2.27/$2.94) respectively.

1Q Results Beat: MWE reported adjusted EBITDA of $141mm vs. CS $133mm and DCF/unit of $0.86 vs. CS $0.69. MWE declared a $0.83/unit distribution, up $0.01/unit sequentially and in-line with CS's forecast which represented a 5% y/y increase from 1Q:12."

MWE Also Acquired $245mm in Assets from CHK: "MWE acquired the 200mmcf/d Buffalo Creek cryo plant which is under construction plus R/W and gathering line, plus other assets in the Granite Wash and Hogshooter formations of the Anadarko Basin. In addition, MWE is investing $50mm in the Eagle Ford to acquire and develop gathering facilities for NFX."

Distribution Growth Set to Accelerate in 2014 and beyond: "We are projecting 5% total distribution growth for 2013 with growth accelerating to 14% and 15% in 2014 and 2015 for a three-year CAGR of ~13%, up from our previous estimate of 9% and well above our outlook for the sector."

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

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing , Commodities

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