Wells Fargo Analyst Comments on MLP's - Makes Ratings Adjustments and Names 2010 Top Picks
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Price: $48.94 -1.01%
Rating Summary:
1 Buy, 5 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 19 | Down: 21 | New: 29
Rating Summary:
1 Buy, 5 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 19 | Down: 21 | New: 29
Trade NS Now!
Wells Fargo analyst comments on MLP's, "We increased valuation ranges across our MLP coverage universe by 9% (median) to reflect a lower market risk premium as investors’ risk appetite continues to increase. Our revised valuation ranges suggest median total return potential of 13%. Notably, this still compares favorably to Wells Fargo’s equity strategist's 2010 total return forecast for the S&P500 of 0%. MLPs should still deliver a robust yield with modest distribution growth of 3% in 2010. For relative outperformance, we would focus on (1) the higher beta upstream and gathering and processing subsectors, which should benefit from yield compression (driven by growing risk tolerance) and favorable commodity prices, (2) MLPs with above-average distribution growth potential, (3) general partner (GP) MLPs, which combine the aforementioned characteristics."
"We lowered the required rate of return (ROR) in our distribution discount models (DDM) by 50-100bps in recognition of investors’ increased risk appetite. We also increased our median price/DCF multiple to 11.5x from 10.5x. As a result of our valuation adjustments, we made the following rating changes. We upgraded NuSTAR Energy, L.P. (NYSE: NS) and Holly Energy Partners, L.P. (NYSE: HEP) to Outperform from Market Perform and downgraded ONEOK Partners, L.P. (NYSE: OKS) to Market Perform from Outperform."
"Outperform-Rated Top Picks. Enterprise Products Partners (NYSE: EPD), Energy Transfer Equity (NYSE: ETE), Genesis Energy (NYSE Amex: GEL), Magellan Midstream Partners (NYSE: MMP), Inergy Holdings (Nasdaq: NRGP), Regency Energy Partners (Nasdaq: RGNC), and Teekay LNG Partners (NYSE: TGP)."
"We lowered the required rate of return (ROR) in our distribution discount models (DDM) by 50-100bps in recognition of investors’ increased risk appetite. We also increased our median price/DCF multiple to 11.5x from 10.5x. As a result of our valuation adjustments, we made the following rating changes. We upgraded NuSTAR Energy, L.P. (NYSE: NS) and Holly Energy Partners, L.P. (NYSE: HEP) to Outperform from Market Perform and downgraded ONEOK Partners, L.P. (NYSE: OKS) to Market Perform from Outperform."
"Outperform-Rated Top Picks. Enterprise Products Partners (NYSE: EPD), Energy Transfer Equity (NYSE: ETE), Genesis Energy (NYSE Amex: GEL), Magellan Midstream Partners (NYSE: MMP), Inergy Holdings (Nasdaq: NRGP), Regency Energy Partners (Nasdaq: RGNC), and Teekay LNG Partners (NYSE: TGP)."
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