Mizuho Securities Downgrades Magellan Midstream Partners (MMP) to Underperform

Mizuho Securities downgraded Magellan Midstream Partners (NYSE: MMP) from Neutral to Underperform with a price target of $72.00 (from $74.00).

Analyst commented Brian Zarahn commented, "Our ratings change to Underperform from Neutral is due to our relative ratings methodology. We continue to believe MMP is a stable, investment grade crude oil/refined products infrastructure-focused MLP with a low cost of capital, healthy distribution coverage and reasonable growth rate for a large cap company. Stability is supported by primarily fee-based cash flows generated from transportation and storage assets. A low cost of capital is underpinned by BBB+ credit rating (highest level in the MLP sector) and no general partner incentive distribution rights structure. However, MMP trades at a healthy premium with P/DCF 2018e at 15.2x vs. 11.2x our universe. We are fine tuning our MMP price target to $72 from $74 due to our modestly lower 2018 Adjusted EBITDA multiple estimate (14.5x from 15x previously) to reflect impact of lower-than-expected oil price. Our $72 price target implies a 7.6% total return, which is below our average total return expectations for the MLP sector."

For an analyst ratings summary and ratings history on Magellan Midstream Partners click here. For more ratings news on Magellan Midstream Partners click here.

Shares of Magellan Midstream Partners closed at $70.51 yesterday.

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