Wells Fargo Raises Valuation on General Partner MLPs - Upgrades Inergy Holdings (NRGP)

October 22, 2009 7:01 AM EDT

Wells Fargo raises valuation on General Partner MLPs -- Upgrade NRGP

Wells analyst says, "We are increasing valuation ranges across our MLP coverage universe by 12% (median). Our revised valuation ranges suggest MLPs still have moderate upside potential with an estimated median total return of 13% (target yield of 8.0% and 2010E distribution growth of 2.8%). Specifically, we are lowering the required rate of return (ROR) in our distribution discount models (DDM) by 100-200 bps in recognition of investors’ increased risk appetite. This more than offsets the impact of a 125 bps (median) reduction in our long-term growth rate forecast to account for the effects of the GP’s incentive distribution rights (IDRs). We are also increasing our median price/DCF multiple to 11x from 9.5x."

"As a result of our valuation adjustments, we are making the following rating changes. We are upgrading Inergy Holdings, L.P. (Nasdaq: NRGP) to Outperform from Market Perform. Our top picks within this subsector include: NRGP. We are adjusting our EPU estimates for NRGP and Penn Virginia (NYSE: PVG)."

To see more analyst ratings on NRGP Click Here.

Inergy Holdings, L.P. has ownership interest in Inergy, L.P., which operates as an energy infrastructure and distribution company.

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