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Sunoco Logistics Partners L.P. Message Board

  • mentges mentges Sep 27, 2013 1:55 PM Flag

    Downgrade = upgrade

    In my nearly 40 years of investing, downgrades mean a big institution wants their clients into a quality company at a lower price - hence they downgrade to walk the price down. . .then a few months later, one of their "friends" at another firm will upgrade the stock. . .Don't tell me I don't know - I was on Wall Street for years, and helped train a generation of analysts. My favorite story was 15 years ago when two of the largest investment banks got their story wrong - one upgraded Coke and the other downgraded Coke on the same day - MarketWatch had the best headline ever - "Is the Glass Half Full or Half Empty?"

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    • With an 8% revenue reduction and 50 cent profit reduction anticipated for '14 I would imagine that a ratings cut was inevitable. However, the street never seems to get it right with SXL. As my best performing overall equity I'll hold, expecting the same rising distribution rates I've come to know and love.

      • 1 Reply to budrickalso
      • From credit Sussie. back in April 2013:

        "Our $71 target price equates to a 16% total return over the next 12 months versus 8-9% for the sector. We expect SXL to increase its distribution by 5% each quarter this year (22% for the full year) and 15% over the next three years, which would be among the top tier in the sector. Only 5 names of the 40+ that we cover have distribution growth over 15% for the next two years. Visibility to growth prospects are the best since we started following the name over five years ago, with $700mm in growth cap-ex in 2013 following $324mm in 2012. Additional opportunities are on the horizon.”

        Personally, I seldom pay any attention to any rating agencies. If fact our two recent pipeline project biddings for the southwest just enforce the upgrade decision back in April. Note mentioned is Mariner East, and addition product flow via Mariner West this fall-early 1st qtr 2014. I agree with mentges, and I will accumulate additional units as the price drifts to the low 60s.

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