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
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."
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