Barclays Maintains an 'Overweight' on MarkWest Energy (MWE); Marcellus/Utica Deals Raise Growth Visibility
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Price: $41.53 --0%
Rating Summary:
5 Buy, 12 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
5 Buy, 12 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Barclays maintains an 'Overweight' on MarkWest Energy (NYSE: MWE) price target of $61.00.
Barclays analyst says, "Markwest announces plans to acquire remaining 49% stake in Marcellus JV from EMG: Markwest will pay $1 billion in cash and 19.95 mm class B units to the seller, EMG. Each year starting July 2013, one fifth of the class B units will convert to common on a 1:1 basis, with all units converting by 2017. The conversion will increase distribution paying units by roughly 4.2% every year based on current unit count."
"We are raising our distribution growth forecast to 11% CAGR, up from 10% previously. The increase is driven by accretion from the acquisition which we estimate to be ~5% per year (in line with management comment of up to 6% accretion in 2013) as well as assuming higher growth capex for 2012-2015. We increase our spending assumption to an average of $825 mm per year, up from $500 mm per year. While part of this is driven by an increase in 2012 growth capex guidance ($900 mm -$1.3 billion), we believe the formation of the Utica JV improves investment outlook. Given effectively all cash/equity funding of this deal, MWE has a strong balance sheet and ample revolver liquidity to fund 2012 projects." (Barclays raises FY11 EPS estimate from $3.64 to $3.76 and FY12 from $2.60 to $3.13)
For an analyst ratings summary and ratings history on MarkWest Energy click here. For more ratings news on MarkWest Energy click here.
Shares of MarkWest Energy closed at $53.25 yesterday.
Barclays analyst says, "Markwest announces plans to acquire remaining 49% stake in Marcellus JV from EMG: Markwest will pay $1 billion in cash and 19.95 mm class B units to the seller, EMG. Each year starting July 2013, one fifth of the class B units will convert to common on a 1:1 basis, with all units converting by 2017. The conversion will increase distribution paying units by roughly 4.2% every year based on current unit count."
"We are raising our distribution growth forecast to 11% CAGR, up from 10% previously. The increase is driven by accretion from the acquisition which we estimate to be ~5% per year (in line with management comment of up to 6% accretion in 2013) as well as assuming higher growth capex for 2012-2015. We increase our spending assumption to an average of $825 mm per year, up from $500 mm per year. While part of this is driven by an increase in 2012 growth capex guidance ($900 mm -$1.3 billion), we believe the formation of the Utica JV improves investment outlook. Given effectively all cash/equity funding of this deal, MWE has a strong balance sheet and ample revolver liquidity to fund 2012 projects." (Barclays raises FY11 EPS estimate from $3.64 to $3.76 and FY12 from $2.60 to $3.13)
For an analyst ratings summary and ratings history on MarkWest Energy click here. For more ratings news on MarkWest Energy click here.
Shares of MarkWest Energy closed at $53.25 yesterday.
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