UPDATE: Bank of America Downgrades Midcoast Energy Partners LP to Underperform, Reiterates $21 PT on Multiple Risk Factors

In a report published Thursday, Bank of America analyst Gabe Moreen downgraded the rating on

from Neutral to Underperform, but reiterated the $21.00 price target. In the report, Bank of America noted, “We downgrade MEP to Underperform from Neutral as units have outperformed since August 2014 and we view certain risks as not currently being reflected in MEP's 5.2% distribution rate. In particular, we believe there continues to be downside risk to MEP's Marketing and Logistics segment due to reduced commodity price volatility, execution risk with drop-downs from EEP, and high leverage at the Midcoast Operating level. Also, MEP's geographic concentration and exposure to second-tier production basins is a risk, in our view, as low commodity prices have persisted. Finally, we also believe drop-downs may be crowding out MEP's ability to finance organic growth at its base systems.” Midcoast Energy Partners LP closed on Wednesday at $25.00.