Nomura Securities Starts Enterprise GP Holdings L.P. (EPE) at Neutral

Nomura Securities initiates coverage on Enterprise GP Holdings L.P. (NYSE: EPE) with a Neutral rating and a price target of $7.50.

Analyst Brian Downey commented, "EP Energy Corporation holds positions in four core asset areas—the southern Midland Wolfcamp, Eagle Ford, Altamont, and Haynesville. We think the company has done a good job of executing, both by cutting costs and increasing efficiencies." However, the company high debt metrics need addressing.

"Due to concerns around the company’s high debt levels (we project 3.8x net debt to trailing EBITDA by YE2016), EPE trades at the lowest EV/EBITDA and EV/DACF multiples of the seven Permian mid cap E&Ps under our coverage. However, the current relative valuation looks appropriate to us when correlated with projected (debt-adjusted) growth rates (see “EV / Debt-Adjusted Cash Flow,” three pages forward). Given its low multiples and investor sentiment, the stock has a lot of leverage to changes in its debt-adjusted growth trajectory, in our view, particularly in terms of debt reduction."

For an analyst ratings summary and ratings history on Enterprise GP Holdings L.P. click here. For more ratings news on Enterprise GP Holdings L.P. click here.

Shares of Enterprise GP Holdings L.P. closed at $5.65 yesterday.

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