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Shares of Noble Midstream Partners LP (NYSE: NBLX) are currently trading at a discount to the sponsored G&P MLPs peer group, despite offering better growth prospects, Barclays’ Heejung Ryoo said in a report. She initiated coverage of the company with an Overweight rating and a price target of $35.
Noble Midstream Partners is a “high-growth, relatively stable” MLP that is backed by a leading oil and gas producer parent, Noble Energy, Inc. (NYSE: NBL), analyst Ryoo mentioned.
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Bright Growth Prospects
Noble Midstream Partners has bright growth prospects, and is expected to generate a distribution CAGR of 20 percent through 2019. The prospects are backed by anticipated base volume growth, organic projects, drop down opportunity in excess of $1 billion and a strong balance sheet, Ryoo noted.
The company’s long-term distribution growth prospects were also supported by “inflation escalators, contribution from third-party revenues and strategically located assets.”
“Stability is provided by 15-year, fee-based, inflation-adjusted contracts with 340,000 acres under dedication in the DJ and Permian Basins,” the analyst added.
Valuation
Noble Midstream Partners has a yield of 5.4 percent, higher than that the 4.6 percent yielded by sponsored high-growth G&P MLP peers. Ryoo believes that Noble Midstream Partners’ shares deserve to trade at a premium due to the company’s “high growth visibility and cash flow stability.”
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.