Mizuho Securities Starts Valero Energy Partners LP (VLP) at Buy
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Mizuho Securities initiates coverage on Valero Energy Partners LP (NYSE: VLP) with a Buy rating and a price target of $57.00.
Analyst Brian Zarahn commented, "We are initiating coverage of VLP with a Buy rating and $57 price target. Our $57 price target is based on the average of our $58 discounted cash flow model (9.75% discount rate) and $57 EV/Adjusted EBITDA (16x multiple on 2017) valuation methodologies. VLP offers above-average cash flow growth and stability at a reasonable valuation. The Partnership is well positioned to achieve our 23% cash distribution CAGR (3-year) estimate supported by a $1 billion EBITDA dropdown inventory, which is 4x current EBITDA, and healthy distribution coverage of 2x. Strong cash flow stability backed by primarily long-term, take-or-pay contracts with investment grade parent Valero Energy (VLO), no direct commodity price exposure, midstream assets integrated with VLO’s refineries and a solid balance sheet."
Shares of Valero Energy Partners LP closed at $43.05 yesterday.
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