Mizuho Securities Starts NuStar Energy L.P. (NS) at Neutral
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Mizuho Securities initiates coverage on NuStar Energy L.P. (NYSE: NS) with a Neutral rating and a price target of $50.00.
Analyst Brian Zarahn commented, "We are initiating coverage of NS with a Neutral rating and $50 price target. Our price target is based on the average of our $53 discounted cash flow model (10.25% discount rate) and $46 EV/Adjusted EBITDA (12.5x multiple in 2017) valuation methodologies. NS offers a healthy 9% yield with 1x distribution coverage supported by largely fee-based cash flows generated from crude oil and refined products transportation and storage assets. One reason the yield is high is because of no distribution growth. Our hold rating is based on limited growth visibility and exposure to declining Eagle Ford crude production volumes (though partially offset by contracts). For income-oriented investors, we believe the distribution is safe."
Shares of NuStar Energy L.P. closed at $48.75 yesterday.
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