Despite a few wrong calls from Wall Street back in February, most felt that the low in oil pricing at $26 was not sustainable, and that while $100 barrel was years off, a rally back to higher prices was inevitable. The 75% rally off the lows took some anxiety out of the markets, and for the most part first-quarter numbers came in good as most companies beat Wall Street estimates. Going forward, investors want to look at the quality stocks that focused on structural and balance sheet strength.
A new Credit Suisse research piece notes that first-quarter earnings beats and in line reports vastly outnumbered the misses. Growth capital expenditures and full-year guidance were mostly held at earlier established levels. The report also cited successful capital market activity as a positive, as many companies had successful secondary offerings to bolster cash and liquidity.
Credit Suisse focused on four stocks. Oddly enough, two of them actually missed first-quarter numbers but remain favorites.
EQT Midstream Partners
This company has remained a top midstream play for investors at Credit Suisse. EQT Midstream Partners L.P. (NYSE: EQM) is a growth-oriented partnership formed by EQT Corporation to own, operate, acquire and develop midstream assets in the Appalachian Basin. The partnership provides midstream services to EQT and third-party companies through its strategically located transmission, storage and gathering systems that service the Marcellus and Utica regions. The partnership also owns 700 miles and operates an additional 200 miles of FERC-regulated interstate pipelines. It also owns more than 1,600 miles of high- and low-pressure gathering lines.
The company had a secondary offering late last year that some thought was ill-timed and dilutive, especially since the stock was down about 15% at the time. The bottom line is at least the company was able to go to the capital market for additional funding and should be set for the foreseeable future. Credit Suisse points out the numerous positives for the company, in addition to the fact that the shares have lacked some of the big moves other companies have made this year.
EQT investors receive a 3.94% distribution. The Credit Suisse price target is $109. The Thomson/First Call consensus target is lower at $91.54. Shares closed Wednesday at $75.73.