Wells Fargo Downgrades QR Energy (QRE) to Market Perform; Near-Term Growing Pains

August 15, 2012 7:05 AM EDT
Get Alerts QRE Hot Sheet
Price: $14.35 --0%

Rating Summary:
    9 Buy, 5 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 35 | Down: 31 | New: 9
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Wells Fargo downgraded QR Energy (NYSE: QRE) from Outperform to Market Perform with a price target range of $17-$19 (from $19-$21).

Analyst, Praneeth Satish, said, "While we view QRE’s 10.9% yield as secure and supported by an expansive hedging portfolio, distribution growth could prove challenging over the next several years, in our view. Notably, we forecast distribution coverage (on a fully diluted basis) could compress in 2013 to approximately 1.0x due to the combination of higher G&A expense (from the termination of a sharing agreement in Q1 2013) and higher interest expense (from QRE’s recently completed high yield debt offering). We are reducing our 2012 and 2013 DCF per unit estimates to $2.02 and $1.93, respectively, from $2.05 and $1.98 primarily to reflect incremental interest expense associated with QRE’s recent high yield debt offering."

For an analyst ratings summary and ratings history on QR Energy click here. For more ratings news on QR Energy click here.

Shares of QR Energy closed at $17.83 yesterday.

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