Why Credit Suisse Sees Strong Upside From Enterprise Products Partners

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Enterprise Products Partners L.P. (NYSE: EPD) has long been a top name in the world of master limited partnerships (MLPs), with a reputation for raising its distributions. With the Enterprise Products Analyst Conference on March 8, 2017, one key analyst has taken a rather bullish perspective on the stock ahead of the conference. In fact this is one of the most bullish targets on Wall Street.

24/7 Wall St. has included some of the key highlights from this analyst’s report, as well as what a few other analysts are saying about the company.

Credit Suisse issued this report with an Outperform rating and a $34 price target, implying an upside of nearly 21% from Monday’s close of $28.17.

The firm noted that as an industry bellwether with exposure across the midstream value chain, it is looking forward to management’s insights regarding natural gas liquids (NGLs), crude and natural gas pricing and production. Credit Suisse expects management to highlight 2016 accomplishments in view of the tough commodity price environment, especially in the first half of 2016.

In terms of the outlook for crude, Credit Suisse commented:

We expect Enterprise to reiterate the views expressed on the fourth quarter conference call, i.e., a flat first half of 2017 due to the estimated 90-150 day lag between rig deployment and volume realization. The U.S. oil rig count was at 609 as of March 3 and the Eagle Ford added 5 rigs w/ and now totals 64 and supports EPD’s 4Q16 reference of the Eagle Ford as a “sleeper basin”.

Permian remains in focus and we would expect substantial discussion about expectations for additional takeaway and processing capacity for both crude and associated gas given EPD’s decision to commission the Midland-to-Sealy pipeline at its full 450 kbpd capacity. Competition is also likely a key theme of this year’s presentation given recent moves by Sunoco Logistics Partners and Energy Transfer Partners in the Permian as well as Targa Resources and Phillips 66 on the liquefied petroleum gas (LPG) export side.

This is the largest U.S. exporter of LPG, accounting for roughly half of U.S. exports. Along with the new Morgan’s Point ethane export facility, which has almost 150 MBPD of 2018 contracted volumes, the company is in a unique position to provide commentary on the state of the NGL market both from the perspective of domestic supply and international demand.

A few other analysts have commented on Enterprise Products Partners as well:

  • Barclays has an Overweight rating with a $33 price target.
  • Sanford Bernstein has a Buy rating with a $34 price target.
  • Ladenburg Thalmann has a Buy rating with a $30 price target.

Its shares were trading at $28.23 on Tuesday, with a consensus analyst price target of $32.69 and a 52-week trading range of $22.96 to $30.25.