UPDATE: Morgan Stanley Initiates Seadrill Partners at Overweight on Attractive Fundamentals

Morgan Stanley initiated coverage on Seadrill Partners (NYSE: SDLP) with an Overweight rating and a $31 price target.

Morgan Stanley noted, "We see a robust distribution growth story (19% DPU CAGR through 2015) as a result of parent's strong motivation to dropdown assets while SDLP is also levered to attractive market fundamentals for modern drilling rigs. … Global floater market fundamentals remain tight, while near-term demand that cannot be fulfilled will likely spillover into the longer term. The ultra-deepwater market is sold out through 2H13, and while we are not calling for dayrates to rise further, we are witnessing increasing customer demand for longer ultra-deepwater contract durations, a trend translating into greater cash flow and distribution visibility."

Seadrill Partners closed at $23.10 on Monday.

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