UPDATE: Bank of America Raises PT on EQT Midstream Partners on Expected 3Q13 Drop-Down

In a report published Monday, Bank of America analyst Gabe Moreen reiterated a Buy rating on EQT Midstream Partners EQM, and raised the price target from $36.00 to $53.00.

In the report, Bank of America noted, “The most significant component of EQM's growth story is the drop-down potential from its general partner (GP), EQT Corp (EQT). EQM previously reiterated plans to execute a large drop-down in 3Q13. While specific detail on size has yet to be provided, mgmt has stated that equity will likely be needed for the large drop-down. Based on revised 2013 guidance at the EQM and EQT levels, we estimate over $250mn in EBITDA from midstream assets is retained at EQT, which primarily includes gathering pipelines and the Sunrise Pipeline. Assuming sector transaction multiples, this implies ~$2bn+ of total acquisition potential for EQM. Our low to mid-teens cash distribution growth forecast through 2015 will likely prove materially conservative once drop-downs from EQT are consummated, in our view. Although the market has discounted some of EQM's drop-down angle, we continue to see upside potential from current levels and reiterate our Buy rating.”

EQT Midstream Partners closed on Friday at $49.32.