UPDATE: Bank Of America Reiterates On QR Energy LP On 1Q14 Recap

In a report published Monday, Bank of America analyst John H. Abbott reiterated a Neutral rating on QR Energy LP QRE, but lowered the price target from $20.00 to $19.00. In the report, Bank of America noted, “As part of its May 7th release, QRE raised its 2014 capex budget by 80% to $182 million. While the news did come as a shock, we do not necessarily view it as a negative. As indicated by management, the acquisition market remains very competitive. As such, we would prefer to see QRE not pay too dearly for a deal. However, at the same time, it still needs to prepare for the step up in distributions in the 1Q15 for its ~16.7 million convertible preferred units from $0.21 per unit to either the greater of $0.475 per unit or the distribution payable to the common units. "With this need in mind, it makes strategic sense for it to focus on its own drilling inventory as an alternative way to make sure that it will be able to maintain a coverage ratio of more than 1x when the change occurs. By our estimates, it still should be able to do so. Note, in our forecast, we no longer assume acquisitions for the rest of 2014.” QR Energy LP closed on Friday at $17.05.