Mizuho Securities Starts Tesoro Logistics (TLLP) at Buy
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Mizuho Securities initiates coverage on Tesoro Logistics (NYSE: TLLP) with a Buy rating and a price target of $58.00.
Analyst Brian Zarahn commented, "We are initiating coverage of TLLP with a Buy rating and $58 price target. Our $58 price target is based on the average of our $58 discounted cash flow model (9.75% discount rate) and $58 EV/Adjusted EBITDA (13.5x multiple on 2017) valuation methodologies. TLLP offers a healthy yield, competitive growth at a reasonable price and a parent that continues to pursue midstream growth opportunities. While we expect TLLP’s distribution growth rate to decline from 17% in 2016 to a 9% CAGR through 2019 due to its larger size and GP distribution, we believe the stock is undervalued at current levels. We believe a potential catalyst in the next 1-2 years is a change in the GP distribution structure to improve TLLP’s equity cost of capital enhancing long-term growth prospects."
Shares of Tesoro Logistics closed at $48.36 yesterday.
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