Analyst Actions: Spectra Energy Partners Target Raised $5.50 At Credit Suisse; Shares Up 3%, Hit Fresh Yr Highs

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Credit Suisse says: "SE Dropdown Blockbuster 15-20% Accretive Year 1; Revising Ests & TP to $44.00 (from $38.50)."

All US Transmission and Storage Assets to Drop Down by YE2013: "Spectra Energy Partners' ( SEP ) corporate parent and owner of its GP, Spectra Energy ( SE ), announced it would drop down all of its remaining US Transmission and Storage assets to SEP by year-end 2013. We have updated our estimates to reflect the accretion from this acquisition."

We Estimate ~20% Accretion to SEP Unitholders in 2014: "We have assumed ~$950mm of EBITDA from $10.5B of assets to be dropped to SEP i.e. a ~11x multiple. We have also assumed maintenance cap ex of ~25-26% of EBITDA. We have continued to assume a 2Q:14 drop of another 50% of Express Platte following the 50% interest which is due to close July 1, 2013. Further, we now expect growth projects announced at the SE level to be carried out at the SEP level we have modeled ~$6B of the $10B in identified opportunities is invested through 2017 at a 7x multiple of EBITDA."

Raising TP by $5.50, to $44: "We are raising our TP to $44 (from $38.50) by applying a 3-stage DDM with 9% and 5.4% distribution growth for the first and second 5-year periods followed by a 1.5% terminal growth rate, discounted at 9%. This translates to a target yield range of 4.70%-5.25% or 12-month valuation range of $42-$46/unit and total return potential of 12-23%, close to a ratings upgrade. We will hold at Neutral for now awaiting either a pull-back in the unit price or updates from management when it plans to discuss details at its 2Q:13 results call scheduled for August 6. We are revising our 2013/2014/2015 EPU estimates to $1.60/$2.35/$2.78 (from $1.64/$1.81/$1.73) respectively."



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.

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This article appears in: Investing , Commodities

Referenced Stocks: SE , SEP

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