Barclays on Energy: Reinstate Coverage on KMI & KMP at Overweight, EPB at Equalweight

August 24, 2012 12:20 PM EDT
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Price: $22.33 -0.49%

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Barclays on Energy: Reinstate Coverage KMI & KMP at Overweight, EPB at Equalweight

Analyst, Richard Gross, said, "We view the $38B El Paso acquisition as a transformative transaction for Kinder Morgan (NYSE: KMI)(PT $40). It expands KMI's footprint into key gas end markets, enhances an already high degree of cash-flow stability and increases dividend growth outlook. The transaction benefits Kinder Morgan Energy Partners (NYSE: KMP)(PT $90) by adding a $12B drop-down opportunity set. EPB's distribution growth is slated to come down from the high teens it saw in 2011 to a more modest, albeit solid, high-single-digit rate. While all three entities in the Kinder family possess high-quality energy assets with growth, on a relative basis we prefer KMI (due to higher growth rate and C-corp GP scarcity value) and KMP (bigger beneficiary of drop downs) relative to El Paso Pipeline Partners (NYSE: EPB)(PT $39)."

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