Mizuho Securities Starts Energy Transfer Equity, L.P. (ETE) at Buy
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Mizuho Securities initiates coverage on Energy Transfer Equity, L.P. (NYSE: ETE) with a Buy rating and a price target of $20.00.
Analyst Brian Zarahn commented, "We are initiating coverage of ETE with a Buy rating and $20 price target, based on the average of our $21 discounted cash flow model (10.5% discount rate) and $19 EV/Adjusted EBITDA valuation (13x multiple in 2018, discounted 1 year to 2017) methodologies. While the complexity of the Energy Transfer corporate structure and relatively aggressive management style are concerns for some investors, we believe ETE offers an interesting risk-reward value proposition as distributable cash flow is poised to grow following completion of organic projects at underlying MLPs ETP and SXL and boost in general partner distributions from ETP as temporary reductions roll off in 2018 and 2019. As such, we forecast distributable cash flow/unit and cash distribution/unit growth to rise from 1/0% in 2017 to 46%/9% in 2018. With a 7% current yield, ETE investors get paid to wait for distribution growth in 2018."
Shares of Energy Transfer Equity, L.P. closed at $16.58 yesterday.
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