Wells Fargo Starts Susser Petroleum Partners LP (SUSP) at Outperform

October 30, 2012 12:29 PM EDT Send to a Friend
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Price: $46.00 --0%

Rating Summary:
    7 Buy, 5 Hold, 0 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 15 | Down: 38 | New: 13
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Wells Fargo initiates coverage on Susser Petroleum Partners LP (NYSE: SUSP) with a Outperform and $28-$29 valuation range.

The firm comments, "SUSP was the first MLP formed with operations primarily focused on wholesale motor fuel distribution. The partnership's valuation is likely to improve over time, in our view, as investors become familiar with this aspect of the midstream value chain and recognize SUSP's relatively low-risk business model and above-average distributions growth prospects. SUSP has (1) primarily fee-based and relatively stable cash flow supported by long-term contracts with its GP sponsor and third parties (negligible direct commodity exposure), (2) a conservative capital structure with minimal net debt, and (3) visible growth from its option to consummate about $200MM of drop-down acquisitions over the next three years. We forecast a 5-year distribution CAGR of 8% (versus the MLP median of 5%), assuming annual investments of $82MM. SUSP currently offers an above-average yield of 7.2% and an attractive one-year total return potential of 26% based on our valuation range of $28-30 per unit."

For an analyst ratings summary and ratings history on Susser Petroleum Partners LP click here. For more ratings news on Susser Petroleum Partners LP click here.

Shares of Susser Petroleum Partners LP closed at $24.40 yesterday.

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