UPDATE: Citigroup Initiates Coverage on Exterran Partners with Neutral Rating, $22 PT

In a report published Friday, Citigroup initiated coverage on Exterran Partners LP EXLP with a Neutral rating and $22.00 price target. Citigroup noted, “We are initiating coverage on EXLP with a Neutral rating and target price of $22.00. Our cautious stand stems from challenged fundamentals for the contract gas compression industry in the current low nat gas price environment. Over the last five years, EXLP has grown distributions at a CAGR of ~ 6.5%, driven primarily by drop-downs from the parent EXH enabling it to overcome margin compression and asset impairments. While we expect drop-downs to continue, investors are unlikely to give EXLP much credit for growth, unless mgmt can demonstrate sustained margin improvement or execute on growth opportunities outside of drop-downs.” Exterran Partners LP closed on Thursday at $21.05.