UPDATE: Wunderlich Initiates Coverage on Magellan Midstream Partners

In a report published Friday, Wunderlich Securities analyst Abhishek Sinha initiated coverage with a Buy rating on

, establishing a $71.00 price target. According to the report, the initiation follows the analyst's belief that MMP warrants a premium valuation versus its peer group given the company's premier asset base and its strong and visible near-term distribution growth supported by a solid coverage ratio. “The partnership has an investment grade rating with stable cash flows primarily supported by fee-based crude oil and a refined products pipeline and storage assets,” the report noted. “The company has one of the lowest costs of capital in the sector due to the absence of the IDR burden. Our $71 valuation and 12- month distribution forecast implies a total return potential of ~17% and results in a 3.5% target yield.” Some key points from the report included: -Fee-based businesses drive 85% of margins -Solid distribution growth supported by a strong coverage ratio -Crude oil expansion to drive growth MMP closed Thursday at $63.04 with shares trading up at 1.04 percent.