UPDATE: Bank of America Raises PT on Delek Logistics on Attractive Risk/Reward Profile

In a report published Wednesday, Bank of America analyst Gabe Moreen reiterated a Buy rating on Delek Logistics Partners LP DKL, and raised the price target from $25.00 to $36.00. In the report, Bank of America noted, “YTD, DKL has produced a total return of 45% versus 22% for the Alerian MLP Index (AMZ). Despite the significant outperformance, we still view DKL's risk/reward profile as attractive at current levels. Our model excludes potential future dropdowns from DKL's general partner (GP), Delek US Holdings, Inc. (DK), as we see some uncertainty around timing and quantity. However, we believe that drop-downs would allow for DKL to grow cash distribution by a low-teens CAGR, above our current forecast of 5.7%. We also recognize the potential for high distribution per unit (DPU) growth from organic opportunities and potential third-party M&A. We increase our PO to $36 (from $25) based on a target yield of 4.75% (from 6.25%) on our annualized 3Q14E (rolling forward from 4Q13E) cash distribution of $1.70 per LP unit.” Delek Logistics Partners LP closed on Tuesday at $32.68.