UPDATE: Bank Of America Downgrades Access Midstream Partners LP Following News of WPZ Merger

In a report published Monday, Bank of America analyst Gabe Moreen downgraded the rating on Access Midstream Partners LP ACMP from Buy to Neutral, but reiterated the $65.00 price target. In the report, Bank of America noted, “We are not saying the ultimate ACMP/WPZ merger will not end up well for ACMP unitholders in the long-run – we just think it will take some time for the market to digest the trade-offs between somewhat lower business risk and a higher up-front yield, but an eventual lower growth rate. The potentially merged ACMP/WPZ entities would have scale and opportunities within interstate natural gas pipeline (legacy WPZ) and natural gas gathering & processing (both legacy ACMP and WPZ) in basins like the Marcellus and Utica. "Coincident with the merger announcement, WPZ moderately lowered its 2014 guidance on delays in the Geismar restart, higher associated costs and questions over WPZ's ultimate Geismar insurance recoveries are not helpful in whetting ACMP investor appetite for combining with WPZ, in our view. The aforementioned issues should prove transitory but also are another misstep from WPZ after the partnership revised guidance lower on multiple prior occasions.” Access Midstream Partners LP closed on Friday at $65.26.
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Posted In: Analyst ColorDowngradesAnalyst RatingsBank of AmericaGabe Moreen
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