UPDATE: Bank of America Initiates Coverage on Phillips 66 Partners LP with Neutral Rating, $34 PT on Mixed Factors

In a report published Monday, Bank of America analyst Gabe Moreen initiated coverage on

with a Neutral rating and $34.00 price target. In the report, Bank of America noted, “Phillips 66 Partners, LP (PSXP), owns and operates crude oil and refined product pipelines and terminals that are supported by fee-based contracts with minimum volume commitments (MVCs). Each of PSXP's three transportation systems is strategically located near refineries that are owned by Phillips 66 (PSX), PSXP's general partner (GP). We believe PSXP offers unitholders the ability to invest in a pure play drop-down story with the potential for substantial cash distribution growth, driven by PSX's stable of logistics assets, as long as PSX continues to drop-down assets at a reasonable pace and valuation. Furthermore, PSXP kept the proceeds from its IPO, and we forecast it will use its net cash position to effectively pre-finance some of the first two projected drop-downs.” Phillips 66 Partners LP closed on Friday at $32.32.