Mizuho Securities Starts Magellan Midstream Partners (MMP) at Neutral
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Mizuho Securities initiates coverage on Magellan Midstream Partners (NYSE: MMP) with a Neutral rating and a price target of $73.00.
Analyst Brian Zarahn commented, "We are initiating coverage of MMP with a Neutral rating and $73 price target, based on the average of our $75 discounted cash flow model (8.25% discount rate) and $71 EV/Adjusted EBITDA (16x multiple in 2017) valuation methodologies. MMP is a stable, investment grade liquids infrastructure-focused MLP with a low cost of capital, healthy distribution coverage and reasonable growth rate for a large cap name. Stability supported by primarily fee-based cash flows generated from transportation and storage assets. Low cost of capital underpinned by BBB+ credit rating (highest in MLP sector) and no general partner incentive distribution rights structure. Our hold rating is based on valuation and our assumption of modest decline in long-term distribution growth rate from double-digit to levels of past few years to 7% CAGR to 2019."
Shares of Magellan Midstream Partners closed at $70.24 yesterday.
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