Magellan Upped to Buy - Analyst Blog
December 30 2013 - 5:15PM
Zacks
On Dec 28, Zacks Investment Research upgraded publicly traded
energy pipeline partnership Magellan Midstream Partners
LP (MMP) to a Zacks Rank #2 (Buy).
Why the Upgrade?
Operating environment and future growth prospects seem bright for
Magellan as earnings estimates for the Tulsa, Oklahoma-based
partnership are on the rise. Over the last 60 days, the Zacks
Consensus Estimate for fourth-quarter 2013 rose 9.3% to 82 cents
per unit, as most of the estimates (8 out of 11 estimates) were
revised higher. Moreover, the Zacks Consensus Estimate for
full-year 2013 is $2.53 per units, up 1.6% as 10 out of 12
estimates were revised higher during the same time frame.
Additionally, Magellan owns an attractive portfolio of energy
infrastructure assets that generate stable and recurring fee- and
tariff-based revenues. This includes the longest U.S. refined
petroleum products pipeline system, access to more than 40% of
refining capacity in the continental U.S. along with imports, and
85 petroleum terminals with more than 80 million barrels of
storage.
Magellan has also established a track record of consistent
distribution growth – its current quarterly distribution of 55.75
cents per unit ($2.23 per unit annualized) is up by 325% from its
initial public offering at the beginning of 2001.
Finally, we believe that the partnership’s acquisition of Rocky
Mountain pipeline properties from Plains All American
Pipeline LP (PAA) will help Magellan to generate
significant cash flow by serving new geographic regions. The
550-mile property has 4 terminals with a storage capacity of 1.7
million barrels. The system carries refined fuels to South Dakota,
Colorado and Wyoming.
Other Stocks That Warrant a Look
One can also look at better-ranked players in the energy sector
like Athlon Energy Inc. (ATHL) and Harvest
Natural Resources Inc. (HNR). Both the stocks sport a
Zacks Rank #1 (Strong Buy).
ATHLON ENERGY (ATHL): Free Stock Analysis Report
HARVEST NATURAL (HNR): Free Stock Analysis Report
MAGELLAN MDSTRM (MMP): Free Stock Analysis Report
PLAINS ALL AMER (PAA): Free Stock Analysis Report
To read this article on Zacks.com click here.
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