UPDATE: Citigroup Upgrades Buckeye Partners to Neutral, Raises PT on Positive Operating Momentum

In a report published Monday, Citigroup upgraded its rating on Buckeye Partners

from Sell to Neutral, and raised its price target from $49.00 to $55.00. Citigroup noted, “This follows two consecutive quarters of strong operating performance, continuing balance sheet repair, success with several crude logistics projects, and traction in gaining additional storage mandates and higher-margin contracts at their BORCO terminal. While all positive indications, we are taking a near-term neutral stance based upon the pending FERC proceedings and expectations for BPL to exit '13 with relatively high leverage as a result ~$330 mil of capex funding and modest coverage levels as cash distributions should exit the year on a ~17% higher unit base (~15.5 mil units, including Class B PIK conversions). 2013 is a key transitional year as the BORCO expansions and Perth Amboy rail project are completed. With the full benefit of these growth projects online in ‘14, we believe this will bring a return to historical annual distribution growth of between 4% to 5%. Our increased TP is based on a target yield of 7.50% (8.50% previously), which we believe more appropriately values the partnership's improving metrics.” Buckeye Partners closed on Friday at $53.13.