Credit Suisse Upgrades Summit Midstream Partners, LP (SMLP) to Outperform
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Credit Suisse upgraded Summit Midstream Partners, LP (NYSE: SMLP) from Neutral to Outperform with a price target of $30.00 (from $27.00), saying more growth is coming.
Analyst John Edwards commented, "SMLP's updated 2016 EBITDA guidance midpoint of $280mm was 6% above 2016 Street estimates (as of 8/4). Given SMLP's 7% beat in the quarter vs. consensus, we believe the Street will have to come up and we continue to believe estimates have baked in far too much conservatism for SMLP's Utica footprint where they stand to benefit from expected growth of both wet gas and dry gas production. Minimum volume commitments continue to support cash flows through this period of declining volumes in the Marcellus, Piceance and Barnett and counter party risk to these MVCs remains negligible. We are essentially holding our estimates which assume the Utica's EBITDA contribution climbs from ~25% of total EBITDA in 2016 to ~44% in 2019. Our target price increases to $30, from $27, as we roll our valuation models to 2017 which implies a ~47% total return which is supportive of an Outperform rating."
Shares of Summit Midstream Partners, LP closed at $22.55 yesterday.
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