Morgan Stanley Sees Limited Stock Upside for Kinder Morgan Energy Partners LP

In a report published Thursday, Morgan Stanley analyst Stephen J. Maresca reiterated an Underweight rating and $82.00 price target on Kinder Morgan Energy Partners LP (NYSE: KMP).

In the report, Morgan Stanley noted, “Top-tier management team and operator of stable, high-quality assets. Cash flow stability from quality pipeline assets, and geographic diversity. Project/acquisition accretion limited by large asset base and high general partner cash incentive share (45+%), capping distribution growth upside. Hard to see KMP outperforming peers on distribution growth that is below industry average. Oil production business (15 – 20% of cash flow) creates material future asset/reserve replacement risk. Drop downs from KMI (into KMP and EPB) will likely be finished by 2014, creating need to continue to develop new organic projects.”

Kinder Morgan Energy Partners LP closed on Wednesday at $78.32.