UPDATE: Wunderlich Securities Downgrades Crosstex Energy on Limited Near-Term Yield Compression
In a report published Wednesday, Wunderlich Securities analyst David Askew downgraded the rating on Crosstex Energy (NASDAQ: XTEX) from Buy to Hold, but reiterated the $33.00 price target.
In the report, Wunderlich Securities noted, “We are downgrading Crosstex Energy (XTEX) to Hold and maintaining our $33 price target. We like the story into the merger/analyst day but believe near-term yield compression from synergies and growth development may be limited. For investors with higher risk tolerance, we prefer to play the story through the GP, Crosstex Energy Inc. (XTXI-$41.16, Buy), which offers sector-leading dividend growth estimates at 53.8%/43.1% in 2014/2015.
"Additionally, the legacy businesses remain challenged, which could be a risk to 2014 guidance and our outlook for double-digit distribution growth in 2015/2016, which includes estimates operational and financial synergies. On the other hand, XTXI has independent cash flow and excess coverage in 2014/2015 and could likely weather lower XTEX distribution growth.”
Crosstex Energy closed on Tuesday at $31.49.
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