Mizuho Securities Starts Enterprise Products Partners (EPD) at Buy

September 30, 2016 7:56 AM EDT
Get Alerts EPD Hot Sheet
Price: $26.95 +0.75%

Rating Summary:
    18 Buy, 4 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 25 | Down: 28 | New: 31
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Mizuho Securities initiates coverage on Enterprise Products Partners (NYSE: EPD) with a Buy rating and a price target of $32.00.

Analyst Brian Zarahn commented, "We are initiating coverage of EPD with a Buy rating and $32 price target, based on the average of our $35 discounted cash flow model (8.75% discount rate) and $29 EV/Adjusted EBITDA (14.75x multiple in 2017) valuation methodologies. EPD is a diversified, investment grade, midstream MLP with above-average cash flow stability, competitive, consistent growth rate, high distribution coverage and exposure to themes of demand-pull infrastructure and exports. High cash flow stability is supported by largely fee-based cash flows generated from a strategically located integrated midstream asset base serving both energy producers and domestic/international consumers. Stability also evidenced by BBB+ credit rating, which is the highest in the MLP sector. We expect EPD to post 5% distribution growth with healthy 1.3x distribution coverage over the next 3 years, quite competitive for a large cap MLP. Growth visibility supported by $10 billion of organic projects (36% NGL, 31% petchem, 33% crude) entering serving 2015-18 and a low cost of capital with no general partner IDRs. With a $57 billion market cap, EPD is the largest and most liquid MLP. For the above reasons, we believe EPD deserves its premium valuation and offers an attractive risk-adjusted value proposition."

For an analyst ratings summary and ratings history on Enterprise Products Partners click here. For more ratings news on Enterprise Products Partners click here.

Shares of Enterprise Products Partners closed at $27.42 yesterday.

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