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Enterprise Products Partners L.P. Message Board

  • cassmoore cassmoore May 1, 2013 4:58 PM Flag

    Credit Suisse comments 5/1

    Valuation summary-
    "We consider EPD units a core holding among MLP investors given its superior position
    across many investment metrics: large inter-connected asset footprint, high visibility to
    growth opportunities, balance sheet strength (only MLP rated BBB+/Baa1), high
    distribution coverage, proven high quality management, strong corporate culture, and
    sustainable distribution growth.
    Given EPD’s superior coverage ratios and visible growth opportunities, we believe that
    investors will likely bid down the yield on EPD’s units lower than what would be typical of
    an MLP growing its distribution roughly 5-7%. We believe that EPD could trade in a yield
    range of 4.25%-4.5% (~a 150-175 bp premium to the yield target on the AMZX) which
    implies a 12-month target range of $63-$67 and $65 TP. Together with $2.78/unit in
    expected distributions suggests a total return of 9%-15%, which is not quite enough to
    support an Outperform rating over the next 12 months, but suffice to say is at the high end
    of Neutral.
    That said, we continue to view EPD as a core holding for MLP investors and would take
    positions with the view of holding those positions for the next 3-5 years, particularly, if we
    see pull backs in the price of EPD units. Should we see a sizable pull back in the value of
    the units, we would most likely become more positive on the stock."

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