UPDATE: Wunderlich Securities Upgrades QR Energy LP to Buy, Raises PT Following Merger Agreement News

In a report published Monday, Wunderlich Securities analyst Abhishek Sinha upgraded the rating on

from Hold to Buy, and raised the price target from $18.00 to $24.50. In the report, Wunderlich Securities noted, “QR Energy, LP (QRE) and BreitBurn Energy Partners LP (BBEP-$21.79, Buy) recently announced the signing of a definitive merger agreement pursuant to which BreitBurn will acquire QR Energy in a unit-for-unit exchange implying a transaction value of approximately $3.0 billion, including QR Energy's existing net debt and outstanding Class C Convertible Preferred Units. BBEP is expected to issue 72mm units, assume QRE debt, and pay $350mm to QRE preferred unit holders. On the heels of the announced transaction, we are upgrading QRE to Buy and raising its price target to $24.50. We believe QRE is trading at a significant discount to arbitrage parity and offers a 32% total return. Our Buy rating on the stock is anchored on our investment thesis for BBEP assuming that the merger would go through.” QR Energy LP closed on Friday at $20.15.