UPDATE: Morgan Stanley Downgrades Magellan Midstream Partners (MMP) to Equalweight

Morgan Stanley analyst Robert Kad downgraded Magellan Midstream Partners (NYSE: MMP) from Overweight to Equalweight with a price target of $53.00 (from $58.00).

The analyst comments "More conservative true maintenance capex Refined Product terminal value assumptions drive a reduction in DCF fair value and change in rating. While we continue to see MMP as a near-term beneficiary of reopening refined product demand improvement, we see tactical capital more focused on reflation trades and longer-term investors looking through near-term trend inflection to potential structural risk around gasoline demand. We see limited likely impact for several years given the expected pace of EV adoption and prospective ability to ensure cost per barrel mile parity through a cost of service rate filing, but nonetheless expect some degree of longer-term risk to be reflected in the stock (expressed in our model through true maintenance capex burdens). Additionally, limited near-term need for Permian natural gas takeaway and pressure challenges around CO2 pipeline conversions could push out Permian oil takeaway repurposing that would help tighten utilization. Nonetheless, MMP remains a very resilient collection of assets within a high quality balance sheet led by a disciplined management team."

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 $48.52 yesterday.

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