Wachovia Upgrades Magellan Midstream Holdings (MGG) to Outperform
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Wachovia upgrades Magellan Midstream Holdings (NYSE: MGG) to Outperform with a $28-$30 valuation range.
The firm cites Magellan's recent dip in share price: down 9.3% year-to-date, compared to a 8.1% decline in Wachovia's MLP Index. Considering Magellan's 23% year-over-year growth, Wachovia believes the market is not valuing Magellan appropriately given a 5.3% yield, which is higher than its peer group average yield of 5%, and a price-to-discounted cash flow multiple of 17.5x the firm's estimate of $1.39, which represents a discount from its peer group median multiple of 18.4x.
Wachovia's $28-$30 target on Magellan represents upside of about 20% at the high-end from current levels around $25.
Magellan Midstream Holdings, L.P. engages in the transportation, storage, and distribution of refined petroleum products. [BCS]
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