UPDATE: BMO Capital Markets Upgrades ONEOK to Outperform
According to a research report published Thursday, BMO Capital Markets has upgraded ONEOK (NYSE: OKE) from Market Perform to Outperform and increased the price target to $51.
In the report, BMO stated, “[We're] 1) incrementally more positive on NGL prices relative to other more dire forecasts (propane has broken back into 5-year inventory levels, and we believe days' supply of ethane will be under its long-term average by September; prices have stabilized the last several weeks and at the very least we think the declines are behind us absent further macro shocks). 2) OKE has proved quite resilient the past two months, holding its own as other NGL-leveraged stocks gave way; this gives us more confidence in downside risk should NGLs remain volatile. 3) Despite oil price weakness, we believe the proposed $1.5B+ Bakken Express pipeline is gaining traction, and we expect management will give a more fulsome overview of the status and timing on the 2Q call; we believe this project is potentially worth $5/sh in OKE value, and want exposure to the name before investor confidence builds further. 4) Driven in part by the Bakken Express, we believe OKE can deliver 15%+ dividend CAGR over the next 3-5 years, without materially changing its 70% free cash payout ratio.”
ONEOK closed at $42.33 on Wednesday.
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Tags: BMO Capital Markets