Morgan Stanley: Williams' Caiman Acquisition is a Game Changer

In a research report released today by Morgan Stanley, Williams'

meeting with the research firm last week resulted in increased conviction in the sustainability of the dividend/distribution growth trajectory. According to Morgan Stanley, "The Caiman acquisition gives Williams a dominant position in the Marcellus and entry into the Utica while extending the growth trajectory and creating meaningful opportunities for the NGL business. With the equity offerings at WMB and WPZ complete, we see further room to run (particularly for WMB) despite 1150 bps of outperformance YTD. We have refined our models and are increasing our price target at WMB to $38, which implies a 3.5% yield on our 4Q12 dividend run-rate of $1.32/share (conservative in our view). Our $38 price target on WMB and $67/unit price target on WPZ (both OW) imply a total return of 22% and 30% respectively." Williams closed Friday at $32.10.