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Pioneer Southwest Energy Partners L.P. Message Board

  • not_totally_gray not_totally_gray Feb 21, 2013 12:59 PM Flag

    UBS downgrade

    Wow, +4% haircut today over UBS downgrade:
    "UBS downgraded Pioneer Southwest Energy Partners L.P. (NYSE: PSE) from Neutral to Sell while maintaining a price target of $22.00 saying the premium is unwarranted.

    Analyst Christopher Sighinolfi comments, "PSE enjoys a portfolio of long-lived, slow decline assets, an oil-directed drilling program, balanced commodity exposure, and a close affiliation with Pioneer Natural Resources (PXD). However, units are up ~11% YTD, outperforming peers by ~380 bps over that time. PSE’s relat ively weak hedge profile, tight coverage ratio, limited distribution growth history, and 8.3% yield leave us cautious at current levels; hence, we are downgrading to Sell on valuation.""

    PSE hedges--which admittedly do suck in 2013--will dramatically improve in 2014. This year is definitely a good time to accumulate shares since production + pricing will both improve a lot next year. Collecting a secure 8% dist while you wait is hardly a bad deal.

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