Citi on Buckeye Partnerships: GP Buyout Expensive, Economics Work Only After Drop-Downs
BPL Hot Sheet
Rating Summary:5 Buy, 3 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 8 | New: 25
Citi comments on transaction reported last Friday when Buckeye Partners, L.P. (NYSE: BPL) announced that it will merge with Buckeye GP Holdings L.P. (NYSE: BGH).
Citi analyst says, "We are maintaining our Hold/High Risk rating and target price of $56.50 for BPL as we believe that any upside from the deal is contingent on the partnership’s ability to execute future acquisitions. For BGH, we are maintaining our Hold/High Risk but taking the target price up to $40.00/unit from $28.00/unit based on a 0.705x target price of BPL. BGH units are up more than 20% and reflect most of the upside from the transaction. Our top liquids MLP recommendations remain Plains All American Pipeline (NYSE: PAA), NuStar Energy (NYSE: NS) and Magellan Midstream Partners (NYSE: MMP)."
Citi analyst says, "We are maintaining our Hold/High Risk rating and target price of $56.50 for BPL as we believe that any upside from the deal is contingent on the partnership’s ability to execute future acquisitions. For BGH, we are maintaining our Hold/High Risk but taking the target price up to $40.00/unit from $28.00/unit based on a 0.705x target price of BPL. BGH units are up more than 20% and reflect most of the upside from the transaction. Our top liquids MLP recommendations remain Plains All American Pipeline (NYSE: PAA), NuStar Energy (NYSE: NS) and Magellan Midstream Partners (NYSE: MMP)."
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