UPDATE: J.P. Morgan Initiates Coverage on Plains GP Holdings LP with Overweight Rating, $27 PT as GP Option Value is Underappreciated

In a report published Monday, J.P. Morgan analyst Jeremy Tonet initiated coverage on Plains GP Holdings LP PAGP with an Overweight rating and $27.00 price target. In the report, J.P. Morgan noted, “We initiate coverage of Plains GP Holdings with an Overweight rating and a $27 YE14 price target. PAGP's assets consist solely of the general partner (GP) interests in Plains All American Pipeline (PAA), making PAGP a levered play on PAA's distribution growth and equity issuance. We believe that PAA's preeminent crude platform positions the partnership to capitalize on the secular trends in unconventional crude oil development that necessitate an extensive energy infrastructure build-out. As such, we expect PAA's distribution growth and equity issuance will translate into PAGP dividend growth of 25-30%. We view PAGP as a top pick due to superior growth combined with relatively less downside risk (no direct NGL price exposure).” Plains GP Holdings LP closed on Friday at $22.89.