Enable Midstream Might Be Too Expensive For Investors: Credit Suisse

In a report published Wednesday, Credit Suisse analyst John Edwards downgraded the rating on Enable Midstream Partners LP ENBL from Outperform to Neutral with a price target of $21, based on the stock valuation.

Enable Midstream reported 2Q15 adjusted EBITDA of $197 million, marginally short of the Credit Suisse estimate of $209 million. Lower than forecasted margins restricted the company's DCF to $135 million, marginally short of the Credit Suisse estimate of $144 million.

The company reiterated its 2015 guidance of EBITDA worth $800-$840 million and DCF of $540-$590 million. Enable Midstream announced a new 200MMcf/d plant in Garvin County and the same is expected to be in service in 1Q17.

In the report Credit Suisse noted that "… management sounded positive on growth going into 2016," with producers pleasantly surprised by well results in Cana Woodford, solid SCOOP results and renewed interest in re-fracing,

The company, however, expects some volume declines in Haynesvilles, Edwards noted, adding that this gap should be filled by MVCs.

The EBITDA and DCF estimates for 2015 have been reduced by 4-5 percent to $817 million and $564 million. The EBITDA estimates for 2016 and 2017 have been reduced by about 11 percent and about 3 percent, respectively.