UPDATE: Wunderlich Initiates Plains GP Holdings on Strong Return Prospects

Wunderlich Securities analyst Abhishek Sinha initiated coverage of Plains GP Holdings, L.P. PAGP with a Buy rating and a $29.00 price target.

The report summary read, “In our view, PAGP offers strong return prospects underpinned by a fee-based crude oil infrastructure business with high growth potential and tax efficient C-Corp structure. PAGP owns 21% interest in Plains All American's (PAA-$50.57, Buy) general partnership and is a pure play general partner with no PAA limited partner (LP) units or physical assets. PAGP will also have a tax shield for 3-4 years as a result of a tax basis step-up during its IPO. The company is a levered play on the underlying MLP, PAA, which is one of the largest midstream MLPs leveraged to crude oil operations. For a detailed analysis on PAA, please refer to our recent initiating coverage report.”

Some key points from the summary stated:

-”Best of both worlds: C-Corp structure with a tax shield.”

-”Attractive total return value proposition.”

-”Significant potential for cash distribution growth.”

-”Strategic leverage to the underlying MLP.”

-”Valuation and price target justification.”

Plains GP Holding closed Friday at $25.25.