As pipeline MLPs go, the combined company will remain well in the middle of the pack as far as size goes. The largest MLP is Enterprise Products Partners L.P. (NYSE: EPD), with a market cap of more than $54 billion. Crestwood, before the merger, is one of the smallest MLPs, with a market cap of just $1.22 billion.

Size really matters to a pipeline MLP. The firms need constant growth in order to fund quarterly distributions to unitholders, and mergers are a key method of growth. Building new pipelines can be an arduous undertaking (see, for example, TransCanada Corp. (NYSE: TRP) and the Keystone XL pipeline).

In addition to Enterprise Products at least six other MLPs check in with market caps above $10 billion:

• Kinder Morgan Energy Partners L.P. (NYSE: KMP), $33.26 billion
• Williams Partners L.P. (NYSE: WPZ), $20.41 billion
• Plains All American Pipeline L.P. (NYSE: PAA), $19.31 billion
• Energy Transfer Partners L.P. (NYSE: ETP), $14.31 billion
• Magellan Midstream Partners L.P. (NYSE: MMP), $11.63 billion
• Oneok Partners L.P. (NYSE: OKS), $11.34 billion

The newly merged company will be larger than some established MLPs though:

• Sunoco Logistics Partners L.P. (NYSE: SXL), $6.26 billion
• Targa Resources Partners L.P. (NYSE: NGLS)
• NuStar Energy L.P. (NYSE: NS), $3.84 billion
• Holly Energy Partners L.P. (NYSE: HEP), $2.1 billion

Prior to the announced merger, Crestwood paid a quarterly distribution of $0.51 and Inergy Midstream paid $0.395. Inergy LP paid $0.29 a quarter. The combined company won’t pay the sum of that, but it’s possible that the new company can approach the $0.67 a quarter paid out by Enterprise. Crestwood’s current distribution is already close to Plains’ $0.575.

Shares of Crestwood are up 4.8%, at $25.00 in a 52-week range of $19.90 to $29.12.

Shares of Inergy Midstream are down 4.8%, at $23.00 in a 52-week range of $18.31 to $26.01.

Shares of Inergy are up 8.5% to $23.89, after posting a new 52-week high of $24.64 earlier today. The 52-week low is $16.40.

Apple Inc. (NASDAQ: AAPL) maintained Buy with $750 price target at Canaccord Genuity.

Applied Materials Inc. (NASDAQ: AMAT) cut to Underweight at J.P. Morgan.

Archer Daniels Midland Co. (NYSE: ADM) started as Underweight at J.P. Morgan.

Baidu Inc. (NASDAQ: BIDU) cut to Equal Weight at Barclays.

CONSOL Energy Inc. (NYSE: CNX) cut to Outperform at Raymond James.

Cree Inc. (NASDAQ: CREE) cut to Hold at Canaccord Genuity.

Electronic Arts Inc. (NASDAQ: EA) cut to Neutral at Stern Agee.

Family Dollar Stores Inc. (NYSE: FDO) cut to Equal Weight at Morgan Stanley.

Flowers Foods Inc. (NYSE: FLO) raised to Buy at Deutsche Bank.

Intel Corp. (NASDAQ: INTC) raised to Buy at Lazard.

Iron Mountain Inc. (NYSE: IRM) named as Bear of the Day at Zacks.

Lowe’s Companies Inc. (NYSE: LOW) cut to Sell at Canaccord Genuity.

SAP A.G. (NYSE: SAP) cut to Neutral at UBS.

SodaStream International Ltd. (NASDAQ: SODA) started as Overweight at Barclays.

SolarCity Corp. (NASDAQ: SCTY) started as Buy at Goldman Sachs, started as Outperform at Credit Suisse and started as Buy at Bank of America/Merrill Lynch.

Sunoco Logistics Partners (NYSE: SXL) named as Bull of the Day at Zacks.

Walgreen Co. (NYSE: WAG) raised to Buy at Jefferies.

Yahoo! Inc. (NASDAQ: YHOO) cut to Market Perform at Bernstein.

Enbridge Inc. (NYSE: ENB) was raised to Buy from Neutral and the price target was raised to $46 for the transportation and distribution of crude oil and natural gas company. What is interesting is that this is close to a street high, as the highest analyst price target appears to be $47.00. even if the consensus target was about $45.30 for Enbridge.

El Paso Pipeline Partners L.P. (NYSE: EPB) received an upgrade to Buy from Neutral. and Sunoco Logistics Partners L.P. (NYSE: SXL) received an upgrade to Buy from Sell. Williams Partners L.P. (NYSE: WPZ) was raised to Buy from Neutral.

The downgrade was in Niska Gas Storage Partners LLC (NYSE: NKA), which was cut to Sell from an already cautious Neutral with only an $11 target, sending shares (or units) down 2.5% to under $12.00.

JON C. OGG

The US dollar index tumbled today, now down -1.18% at 82.375. The GSCI commodity index fell by about -1.1% to 630.33, with commodities prices higher today on the weaker dollar. WTI crude oil rose a whopping 4.9% today, closing at $91.40/barrel. Brent crude trades up 2.83% at $108.90/barrel. Natural gas is down -0.68% today to $2.90/thousand cubic feet. Gold settled at $1,609.30/ounce, up 1.2% for the day.

The unofficial closing bells put the DJIA up more than 217 points to 13,096.09 (1.69%), the NASDAQ rose about 58 points (2%) to 2,967.90, and the S&P 500 rose 1.9% or about 26 points to 1,390.99.

There were several analyst upgrades and downgrades today, including Nokia Corp. (NYSE: NOK) cut to ‘sell’ at Goldman Sachs; Nordstrom Inc. (NYSE: JWN) cut to ‘neutral’ at Baird; Whole Foods Market Inc. (NASDAQ: WFM) raised to ‘overweight’ at Morgan Stanley; MGIC Investment Corp. (NYSE: MTG) cut to ‘market perform’ at FBR; and Sunoco Logistics Partners L.P. (NYSE: SXL) raised to ‘buy’ at BofA/ML.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Activision Blizzard Inc. (NASDAQ: ATVI) is down -4.9% at $11.19; American Water Works Co. Inc. (NYSE: AWK) is up 3.4% at $37.49 after posting a new 52-week high of $39.38 earlier today; Body Central Corp. (NASDAQ: BODY) is down -15.9% at $8.07 after posting a new 52-week low of $7.71 earlier today; CBS Corp. (NYSE: CBS) is up 5.8% at $34.97 after posting a new 52-week high of $35.17 earlier today; Kodiak Oil & Gas Corp. (NYSE: KOG) is up 7.1% at $8.10 after posting a new 52-week high of $8.35 earlier today; Westport Innovations Inc. (NASDAQ: WPRT) is up 12.8% at $39.00; Agrium Inc. (NYSE: AGU) is up 0.9% at $95.04 (more coverage here); Beazer USA Homes Inc. (NYSE: BZH) is down -2.6% at $2.25 (more coverage here); NYSE Euronext (NYSE: NYX) is up 1.3% at $24.89; Viacom Inc. (NASDAQ: VIAB) is up 3.2% at $47.30 (more coverage here); and Wellcare Health Plans Inc. (NYSE: WCG) is down -11.5% at $55.21.

Before markets open on Monday we are scheduled to get earnings results from Alexander’s Inc. (NYSE: ALX), American States Water Co. (NYSE: AWR), Changyou.com Ltd. (NASDAQ: CYOU), FreightCar America Inc. (NASDAQ: RAIL), HCA Holdings Inc. (NYSE: HCA), MakeMyTrip Ltd. (NASDAQ: MMYT), Sohu.com Inc. (NASDAQ: SOHU), and Youku Inc. (NYSE: YOKU) among others.

Some standouts from today include the following stocks:

Knight Capital Group Inc. (NYSE: KCG) is up 56.9% at $4.05. The financial services firm caught a couple of badly needed breaks today. More coverage here and here.

Molycorp Inc. (NYSE: MCP) is down -28% at $11.57 after posting a new 52-week low of $11.31 earlier today. The rare earths miner posted disappointing results last night, and offered a weak-sounding outlook. More coverage here.

Zipcar Inc. (NASDAQ: ZIP) is down -34.9% at $6.93 after posting a new 52-week low of $6.50 earlier today. The car rental firm posted weaker-than-expected earnings and revenues. More coverage here.

Stay tuned for Monday. Fed Chairman Ben Bernanke is giving a speech. We have noted the following events on the schedule (all times Eastern):

• 11:30 a.m. – 3- and 6-month bill auctions
• 3:00 p.m. – Treasury STRIPS

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Have a great weekend!

Paul Ausick

Annaly Capital Management Inc. (NYSE: NLY) cut to Hold at Wunderlich.

ArcelorMittal (NYSE: MT) maintained Outperform after S&P downgrade with comment “We actually believe a material overhang has been removed, which makes the equity a lot more investable…” by Credit Suisse.

CAI International Inc. (NYSE: CAP) named Value Stock of the Day at Zacks.

CRA International (NASDAQ: CRAI) named Bear of the Day at Zacks.

Hornbeck Offshore Services Inc. (NYSE: HOS) reiterated Outperform with $46 target and noted as “Sell off overblown” at Credit Suisse.

Marathon Petroleum Corp. (NYSE: MPC) named Bull of the Day at Zacks.

Mercadolibre Inc. (NASDAQ: MELI) raised to Overweight at JPMorgan.

MGIC Investment Corp. (NYSE: MTG) cut to Market Perform at FBR.

Nokia Corp. (NYSE: NOK) cut to Sell from Neutral at Goldman Sachs.

Nordstrom Inc. (NYSE: JWN) cut to Neutral at Baird.

OpenTable Inc. (NASDAQ: OPEN) raised to Outperform at Oppenheimer after strong guidance (shares indicated up 10%).

Parker Hannifin Corp. (NYSE: PH) maintained Buy but cut target to $92 from $100 at Argus.

Saks Inc. (NYSE: SKS) reiterated Buy with $14 target at Argus.

Sunoco Logistics Partners L.P. (NYSE: SXL) raised to Buy at BofA/ML.

Teradata Corp. (NYSE: TDC) raised to Buy at Stern Agee.

Whole Foods Market Inc. (NASDAQ: WFM) raised to Overweight at Morgan Stanley.

World Fuel Services Corporation (NYSE: INT) cut to Underperform at BofA/ML.

Zipcar Inc. (NASDAQ: ZIP) cut to Underweight at Morgan Stanley, to Neutral at JPMorgan and to Hold at Needham (all after lower guidance; shares down almost 30%).

If you enjoyed the top analyst upgrades and downgrades, you can join our free email newsletter that includes analyst summaries each morning sent right to your inbox. We also cover top issues such as IPOs, special financial exclusives, mergers and more. Sign up in the box below.

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JON C. OGG

The ratings agency has looked at 10 pipeline and midstream companies with an eye to both transportation and processing facilities. These MLPs include Enterprise Products Partners LP (NYSE: EPD), EQT Corp. (NYSE: EQT), MarkWest Energy Partners L.P. (NYSE: MWE), National Fuel Gas Co. (NYSE: NFG), NiSource Inc. (NYSE: NI), Rockies Express Pipeline LLC (a joint venture of Kinder Morgan Energy Partners L.P. (NYSE: KMP), ConocoPhillips (NYSE: COP) and Sempra Energy (NYSE: SRE)), Spectra Energy Corp. (NYSE: SE), Sunoco Logistics Partners L.P. (NYSE: SXL), Tennessee Gas Pipeline Co. (owned by Kinder Morgan), and Williams Partners L.P. (NYSE: WPZ).

The main appeal of the Marcellus shale play is its proximity to the populated markets of the Northeast and Atlantic Coast regions. Fitch expects pipeline expansion and reversal projects, as well as additional processing plants to come online as production grows. Here’s a quick look at each company, along with an implied gain based on today’s share price.

Enterprise Products Partners (NYSE: EPD) has proposed building a 1,230-mile pipeline to transport ethane — a natural gas liquid (NGL) — from the southern Marcellus shale play to Texas. The pipeline will involve reversing the flow of a refined products pipeline and building about 450 miles of new pipeline at a cost of about $1.3 billion. Shippers have not yet fully committed to taking all the capacity on the 190,000 barrel/day ATEX pipeline, which is set to be in service by early 2014. Fitch gives Enterprise a first-mover advantage here and expects the pipeline to be fully committed once it is put into service. Enterprise shares are trading at $51.61 today, and the consensus target price is $56.23, for an implied gain of around 9%.

EQT Corp. (NYSE: EQT) has put a portion of its mid-stream assets into a new MLP, EQT Midstream Partners L.P. (NYSE: EQM) and the two companies are expanding rapidly in gathering operations. EQT’s ‘negative’ outlook reflects risk associated with the company’s expansion of its upstream operations, which vary with volatile commodity prices. EQT’s shares are trading at $53.70 today, and the consensus target price is $63.07, for an implied gain of around 17%.

MarkWest Energy Partners (NYSE: MWE) is the largest gatherer and processor in the the Marcellus play and the company continues to expand both its gathering and processing assets. Fitch rates MarkWest ‘positive’ on credit implications due to the focus on expanding fee-based revenues. MarkWest’s shares are trading at $51.02 today, and the consensus target price is $61.00, for an implied gain of around 20%.

Natural Fuel Gas (NYSE: NFG) is currently expanding two pipelines that have been fully subscribed and is working on projects to transport natural gas to Canada. As with EQT, Natural Fuel Gas is also expanding its upstream operations, exposing the company to added commodity risk. Natural Fuel Gas shares are trading at $46.45 today, and the consensus target price is $59.00, for an implied gain of around 27%.

NiSource (NYSE: NI), like Enterprise, is also reversing the flow of one pipeline to transport natural gas from the Marcellus shale play to the Gulf Coast. The reversed flow is scheduled to start in late 2014 with two shippers that have signed long-term transportation agreements. NiSource’s shares are trading at $24.44 today, and the consensus target price is $25.44, for an implied gain of around 4%.

The Rockies Express (REX) pipeline system was constructed to move natural gas from the gas fields of Wyoming and Colorado to a terminus in Ohio. The pipeline is due to re-contract with shippers in 2019, and Fitch is naturally wary of the company’s ability to do so at current rates. Kinder Morgan is also required to sell its 50% stake in the pipeline as part of its agreement with the Federal Trade Commission in the company’s acquisition of El Paso Corp. Fitch places a ‘negative’ credit implication on REX because of the costliness of reversing the flow of the pipeline. Kinder Morgan’s shares are trading at $82.70 today, and the consensus target price is $86.58, for an implied gain of around 5%.

Spectra Energy (NYSE: SE) recently completed a pipeline project in the Marcellus region and has five others on the drawing board. The company is seeking final approval to an expansion of its pipeline into New York City and is also considering additional pipelines to Canada. The company has a ‘stable’ outlook with ‘neutral’ to ‘positive’ credit implications from Fitch. Spectra’s shares are trading at $29.16 today, and the consensus target price is $32.82, for an implied gain of around 13%.

Sunoco Logistics (NYSE: SXL) and MarkWest are jointly developing an NGL pipeline to deliver ethane from the Marcellus region to processing plants in Pennsylvania and Ontario. Sunoco also owns pipelines that could be reversed to transport NGLs to East Coast ports for export. Sunoco’s shares are trading at $37.88 today, and the consensus target price is $39.72, for an implied gain of around 5%.

Kinder Morgan’s Tennessee Gas Pipeline has a very strong position in the Marcellus play and two current expansion projects due for completion in November 2013. The pipeline company is being held on ‘ratings watch positive’ by Fitch and the fully-subscribed pipeline system is given a ‘positive’ credit reading as well.

Williams Partners (NYSE: WPZ) has committed to capital spending of $11 billion on pipeline and midstream projects in the Marcellus shale by 2017. More than half will be directed at midstream infrastructure and the rest for expansion of the company’s Transco pipeline system. Fitch gives the company a ‘positive’ outlook with a ‘positive’ implication for credit.Williams’s shares are trading at $52.44 today, and the consensus target price is $63.23, for an implied gain of around 21%.

Paul Ausick

In a much larger piece we featured the new risks that investors need to consider this summer in the largest MLP entities.  Now comes a fresh downgrade of Enterprise Products Partners, L.P. (NYSE: EPD) by Zacks to Neutral (FULL NOTE HERE).  The downgrade noted that Enterprise reported decent earnings, but the fear is over a decline in segmental gross margin and macro risks compelled the downgrade.  Enterprise is down 2.7% at $48.73 against a 52-week range of $36.36 to $52.95, and that puts the shares (units actually) down only about 8% from its 52-week high.  Enterprise has actually help up better than many peers.  There is a big sector risk here in this downgrade as Enterprise has a market value of $43 billion or so as the largest MLP out there in America.  This matters if it sends the price much lower from here… Many ETFs, closed-end funds, and other MLP funds have enterprise weighted at close to 10% of their entire allocation so a big drop here could drag down all of the tracking products even if the entire sector did not move the same direction as the leader in the sector.

Zacks also noted that a competing MLP called Sunoco Logistics Partners (NYSE: SXL) is now only a Hold rating while calling it a Buy in another note from a different analyst. Sunoco Logistics Partners is down 1.9% at $33.81 against a 52-week range of $24.40 to $42.11 and the current price is down almost 20% from its high.

Even the great Kinder Morgan Energy Partners LP (NYSE: KMP) which is the second largest of the MLPs has fallen almost 13% from its recent all-time high.  Its shares (actually units) are down 1.2% at $78.92 against a 52-week range of $63.42 to $90.60.

JPMorgan Alerian MLP Index ETN (AMEX: AMJ) is down 1.9% at $36.81 and shares are now down over 10% correction mark as the 52-week range is $31.52 to $41.68. The ALPS Alerian MLP ETF (AMEX: AMLP) is down 1.25% at $15.82 and it is nearing a 10% correction as its 52-week range is $13.10 to $17.19.

There are two closed-end funds we have tracked.  Kayne Anderson MLP Investment Company (NYSE: KYN) is down 1.7% at $29.20 against a 52-week range of $22.87 to $33.10.  The Cushing MLP Total Return Fund (NYSE: SRV) had a big gap-up on Tuesday, but shares are down 5.5% at $8.78 against a 52-week range of $8.01 to $10.65. The Kayne Anderson fund is down 11.8% from its year-high and the Cushing fund is down over 17% from its year-high.

Investors may want to pay attention over the next couple of weeks as Standard & Poor’s Ratings Services announced that it plans to hold a telephone conference call on Thursday, June 14, 2012 at 11:00 A.M. on the Master Limited Partnership sector.

What may help MLPs is if investors feel another couple of years or more of such low yields in the 10-Year Treasury Note will be upon us.  If so, investors may flock to the MLP sector for those high payouts which include income and also a return of capital.  Unfortunately, there is a growing concern over the tax structure of dividends for the wealthy.  You can also throw in attacks on the tax breaks for oil companies which leaves some uncertainty here as many investors are not sure which aspects of “oil companies” those attacks really pertain to.

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JON C. OGG

Sunoco shareholders will receive payment equal to $25 in cash and 0.5245 ETP common units for each share of Sunoco stock they own. Sunoco shareholders can choose to take $50 in cash, 1.0490 ETP common units, or the cash-common unit split, although the aggregate cash paid will be capped at 50%.

ETP also receives the general partner interest, incentive distribution rights, and 32.4% Sunoco interest in Sunoco Logistics Partners (NYSE: SXL).The owner of ETP’s general partner, Energy Transfer Equity L.P. (NYSE: ETE) will forego its right to about $210 million in incentive distributions from ETP over the next 12 quarters as part of the deal. After the deal closes Sunoco and Sunoco Logistics Partners “will operate under the Energy Transfer Equity, L.P. umbrella of companies.”

One thing that ETP won’t get is Sunoco’s refining business:

[U]nder the merger agreement, Sunoco will continue its plans for exiting its refining business as previously announced, as well as continue its plans for the proposed refinery joint venture being discussed by Sunoco and The Carlyle Group.

The joint-venture deal with Carlyle would keep Sunoco’s 335,000 barrel/day Philadelphia refinery in operation. As currently being discussed, Sunoco would contribute the Philadelphia refinery to a joint venture with Carlyle in exchange for a non-operating minority stake. The company would have no obligations to support the refining operations.

This acquisition is a pretty smart move for ETP. Its current cash flow comprises 100% natural gas transportation and logistics, and the Sunoco deal cuts the company’s natural gas cash flow to 70% of the firm’s total and adds a 30% cash flow from liquids transportation. Given the turmoil in natural gas production and pricing, ETP’s diversification into liquids couldn’t have come at a better time.

Sunoco’s shares are trading up 21% at $49.50 in the pre-market this morning, above the company’s 52-week range of $27.76-$43.43. ETP’s shares are up about 2.9% at $49.29 in a 52-week range of $38.08-$54.71.

Paul Ausick

AON Corporation (NYSE: AON) Cut to Neutral at Citigroup.
AstraZeneca (NYSE: AZN) Cut to Underperform at BofA/ML.
Cisco Systems, Inc. (NASDAQ: CSCO) Reiterated Outperform with $26 target at Credit Suisse.
Digital Realty (NYSE: DLR) Started as Sell at Cantor Fitzgerald.
Digital River Inc. (NASDAQ: DRIV) Cut to Hold at Argus.
Henry Schein, Inc. (NASDAQ: HSIC) Cut to Neutral at Credit Suisse.
International Business Machines Corporation (NYSE: IBM) Started as Buy with $230 target at Stern Agee.  (LINK: FULL DETAILS)
Pep Boys-Manny, Moe & Jack Inc. (NYSE: PBY) Cut to Hold at Argus.
Salesforce.com (NYSE: CRM) named Bear of the Day at Zacks.
Senior Housing Properties Trust (NYSE: SNH) Cut to Hold at Stifel Nicolaus.
Seaspan Corporation (NYSE: SSW) Cut to Market Perform at Wells Fargo.
Sirius Satellite Radio, Inc. (NASDAQ: SIRI) Started as Underweight at Barclays.
Sohu.com Inc. (NASDAQ: SOHU) downgraded to Hold at RBS and Cut to Neutral at Susquehanna.
Sunoco Logistics, LP (NYSE: SXL) named as Bull of the Day at Zacks.
Thor Industries, Inc. (NYSE: THO) named Value stock of the day at Zacks.
Urban Outfitters Inc. (NASDAQ: URBN) Cut to Sell at Brean Murray.
Zoltek Companies, Inc. (NASDAQ: ZOLT) Cut to Underperform at Needham (LINK: FULL SUMMARY).

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JON C. OGG

Activision Blizzard Inc. (NASDAQ: ATVI) Reiterated Buy with $18 target at Argus.
Air Products & Chemicals Inc. (NYSE: APD) Reiterated Buy at BofA/ML.
Chimera Investment Corporation (NYSE: CIM) Cut to Sell at Wunderlich.
Dell Inc. (NASDAQ: DELL) Maintained Underperform at Credit Suisse; Reiterated Buy with $22 target at Argus.
Dick’s Sporting Goods Inc. (NYSE: DKS) Raised to Conviction Buy List at Goldman Sachs.
Gentiva Health Services (NASDAQ: GTIV) named Bear of the Day at Zacks.
Geron Corporation (NASDAQ: GERN) Cut to Neutral at JPMorgan.
Plains All American Pipeline, L.P. (NYSE: PAA) named Value stock of the day at Zacks.
Research in Motion Ltd. (NASDAQ: RIMM) Raised to Neutral from Sell at Goldman Sachs.
Sunoco Logistics, LP (NYSE: SXL) named Bull of the Day at Zacks.
TIBCO Software Inc. (NASDAQ: TIBX) Started as Market Perform at BMO Capital; Started as Market Outperform at JMP Securities.

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