UPDATE: JPMorgan Upgrades Magellan Midstream Partners (MMP) to Overweight
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JPMorgan analyst Jeremy Tonet upgraded Magellan Midstream Partners (NYSE: MMP) from Neutral to Overweight with a price target of $57.00 (from $52.00).
The analyst comments "While inflation fears permeate the market, MMP stands well positioned to benefit from higher inflation. Already poised for a 6% tariff increase on July 1, MMP could see an even higher increase next year as YTD inflation tracks in the mid-teens. Magellan possesses best-in-class operational management, effectively limiting cost structure increases and enabling significant revenue growth to fall to the bottom line. Moreover, the $435mm independent terminal sale closing in the near term represents a key catalyst, underpinning higher buybacks. On the butane blending side, in addition to wider butane-gasoline spreads potentially benefitting 2023, the Biden administration might suspend summer blending restrictions, which would represent a notable positive for MMP. Finally, amidst a choppier market backdrop, we think MMP represents a leading relative safe haven in the MLP space, which could drive incremental interest. Overall, MMP’s best-in-class corporate governance, financial flexibility, and value-focused management team put the partnership on the short list of MLPs we would feel comfortable holding over the long term."
Shares of Magellan Midstream Partners closed at $48.83 yesterday.
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