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NuStar gains after Credit Suisse upgrade

NEW YORK (AP) -- A Credit Suisse analyst upgraded NuStar Energy LP on Tuesday, saying the pipeline operator and asphalt refiner has a fair price after a big selloff.

THE SPARK: Brett Reilly raised his rating for NuStar to "Neutral" from "Underperform." Investor worries about the San Antonio-based company cutting its distribution are now reflected in its stock price, he said.

THE ANALYSIS: Reilly estimates that a pipeline master limited partnership, such as NuStar should have a yield — annual distribution divided by the stock price — of 8 percent if its growth is slow. Assuming that, the company's current price implies a 29 percent cut in the company's current distribution, to $3.13 from $4.38.

But Reilly estimated that, based just on NuStar's cash flow from its pipelines and storage facilities, it should be able to make a higher payment to investors, of $3.30, and he's not forecasting a distribution cut.

The partnership units, or shares, have lost about 31 percent of their value. In the past two weeks alone, they're off 20 percent.

SHARE ACTION: Up $2.30, or 5.9 percent, to $41.37.