Mizuho Securities Starts Energy Transfer Partners (ETP) at Buy

Mizuho Securities initiates coverage on Energy Transfer Partners (NYSE: ETP) with a Buy rating and a price target of $45.00.

Analyst Brian Zarahn commented, "We are initiating coverage of ETP with a Buy rating and $45 price target, based on the average of our $49 discounted cash flow model (10.5% discount rate) and $41 EV/Adjusted EBITDA (11x multiple in 2018, discounted 1 year to 2017) valuation methodologies. We believe ETP offers an interesting risk-reward value proposition with as the only investment grade MLP with double-digit yield and visibility on distribution coverage improvement from gas, NGL and crude infrastructure assets entering service through year end 2017. Distribution coverage improvement is supported by more than $1 billion general partner reductions and contributions from $9 billion organic projects entering service 2H16-2017. Though the Dakota Access crude pipe project is currently in regulatory limbo, we assume the project is approved though in-service date will likely be later than expected. Longer term, ETP’s high general partner splits are a headwind for future distribution growth, but at an 11% yield, we expect price appreciation from gradual yield compression (multiple expansion) from distribution coverage improvement."

For an analyst ratings summary and ratings history on Energy Transfer Partners click here. For more ratings news on Energy Transfer Partners click here.

Shares of Energy Transfer Partners closed at $37.36 yesterday.

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