Goldman Sachs Downgrades NuStar Energy (NS), NuStar GP Holdings (NSH) to Neutral

Goldman Sachs downgraded NuStar Energy L.P. (NYSE: NS) from Buy to Neutral with a price target of $63 (from $68). NuStar GP Holdings (NYSE: NSH) was downgraded from Buy to Neutral with a price target of $42.00 (from $45.00).

Analyst Steve Sherowski said, "We do not believe the NuStar story is broken. However, based on NS’s revised guidance, we see greater risk to distribution growth resumption in 2015. We also believe growth will likely be lower than we initially forecast (1% vs. 2% previously) leaving less room for further yield compression. As such, we expect NS/NSH units to remain range bound until we get better clarity on 2015 cash flow growth. Our NS target price is based on a 7.0% target yield (vs. 7.2% current yield), 100bps above our benchmark MLP target yield. Our NSH target price is based on an 85%/15% blend of our fundamental (base case) GP cash flow multiple valuation and a theoretical M&A component based on a risk-weighted sum of the parts."

For an analyst ratings summary and ratings history on NuStar GP Holdings click here. For more ratings news on NuStar GP Holdings click here.

Shares of NuStar GP Holdings closed at $39.16 yesterday.

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