Stifel Cuts Price Target on Sunoco Logistics Partners (SXL); Reiterates Hold
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Stifel maintained a Hold rating on Sunoco Logistics Partners (NYSE: SXL), and cut the price target to $24.00 (from $29.00), following a joint call with Energy Transfer Partners (NYSE: ETP). This transaction appears to be more of a stepping-stone as opposed to one-and-done. Management noted operating in the high splits of an IDR structure is unsustainable long-term and a roll-up is inevitable for all entities.
Analyst Selman Akyol commented, "Following the joint Sunoco Logistics Partners (SXL, $24.47, Hold) and Energy Transfer Partners (ETP, $36.52, Hold) conference call, we are cautious of the combined entity given the IDR structure remains outstanding, along with an elevated equity cost of capital. We discussed our initial thoughts in Energy Transfer Throws Another Curveball: Sunoco Logistics to Acquire Energy Transfer Partners where we discussed a more neutral view of the transaction. Below are some additional takeaways, in addition to reasons to be optimistic and reasons for concern."
Shares of Sunoco Logistics Partners closed at $24.47 yesterday.
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