UPDATE: Citigroup Reiterates Buy Rating, Lowers PT on MarkWest Energy Partners LP on Growth Potential, Near-Term Challenges

In a report published Friday, Citigroup analyst John K. Tysseland reiterated a Buy rating on MarkWest Energy Partners LP MWE, but lowered the price target from $79.50 to $77.00. In the report, Citigroup noted, “We are reducing our TP on MWE to $77.00 from $79.50. We still believe MWE has the potential to accelerate its distribution growth, but this now appears to be further down the road from our previous expectations. Reduced cash flow guidance & increased equity needs over the next 12 months have significantly reduced our DCF/unit forecast. As a result, we are lowering our 12-month forward distribution growth from ~12% to ~7% as we now expect MWE to maintain sequential $0.01/unit distribution increases throughout the first half of 2014. We maintain our target yield of 4.75% despite the partnership's current yield of ~5%. We expect MWE's yield to compress once the partnership accelerates its distribution growth toward the back half of 2014 as volumes continue to grow and recent operating challenges/costs fade.” MarkWest Energy Partners LP closed on Thursday at $69.29.