UPDATE: Credit Suisse Starts Antero Midstream Partners LP (AM) at Outperform
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Credit Suisse initiated coverage on Antero Midstream Partners LP (NYSE: AM) with an Outperform rating and a price target of $36.00.
Analyst John D. Edwards said, "AM’s “build vs. buy” growth strategy is based on its ability to complete organic projects with attractive economics (4-6x EBITDA per mgmt.). We expect AM to invest ~$700mm in organic projects over the NTM, and its backlog is expected to grow significantly thanks to its Right of First Offer (ROFO) agreement with AR. We expect AM to take advantage of its ROFO by building out processing and fractionation infrastructure as well as additional gathering and compression capacity over the coming years."
"Third-party agreements assigned to AM by AR add additional upside. As an anchor shipper in many regional midstream projects, AR is often offered equity interests in these projects. Current ownership interests expected to be passed to AM include AR’s 20% non-operated stake in the ET Rover Pipeline (expected to be in-service by 1Q17) and a 15% non-operating stake in an unnamed regional gathering system (expected to be in-service by 1Q15). AM also has the option to buy AR’s Fresh Water Distribution business, which we believe would add an additional ~$150-180mm of annual EBITDA," he added.
Shares of Antero Midstream Partners LP closed at $27.69 yesterday.
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