Dominion Midstream Partners Quiet Period Ends, Analysts Initiate Mixed Coverage

Dominion Midstream Partners LP's DM quiet period terminated on Monday, allowing firms involved in the company's initial public offering proceedings to initiate coverage.

Goldman Sachs: Strong Distribution Growth Offset By Valuation

Steve Sherowski of Goldman Sachs initiated coverage of Dominion with a Neutral rating and $32 price target.

The analyst expects the company to offer top-tier distribution growth at 20 percent compounded annually through 2018 given its preferred equity interest in Cove Point liquefied natural gas (LNG) and dropdown backlog from its parent company, Dominion Resources.

However, Sherowski notes that the strong distribution growth outlook is already priced in to the stock's current price, creating a fairly balanced risk to reward proposition for investors.

Citigroup: Long Room To Run

Blake Clayton of Citigroup initiated coverage of Dominion with a Buy rating and $37 price target.

The analyst believes that the company will be considered among the fastest-growing natural gas MLPs given its LNG exports at Cove Point.

Clayton notes that Cove Point is currently a regas facility and gas transportation site. Dominion's parent company, Dominion Resources, recently began construction to add liquefaction capacity.

The analyst expects LNG exports to begin in late 2017 from Cove Point. Accordingly, the facility will contribute to a ramp up in EBITDA to $794 million in 2018 from $203 million in 2015.

Barclays: ‘Unparalleled Growth Opportunity'

Richard Gross of Barclays initiated coverage of Dominion with an Overweight rating and $39 price target.

The analyst believes that shares still offer a “compelling value proposition” to investors, despite a run up following its IPO.

Gross notes that the company benefits from a large and diverse dropdown inventory, a highly visible cash flow stream and minimal direct commodity exposure. As such, the analyst projects Dominion to be among the fastest-growing MLPs with an eligible dropdown inventory that could exceed $2 billion of EBITDA.

UBS: Classic Story With A Twist

Shneur Gershuni of UBS initiated coverage of Dominion with a Buy rating and $38 price target.

The analyst notes that Dominion is a “classic GP/MLP drop story” where Dominion Resources will “drop” assets to Dominion Midstream to finance growth projects, including the LNG liquefaction project.

According to Gershuni, MLP unit holders could benefit from 20 percent plus distribution growth. The analyst adds that Dominion Resources has a pipeline of $2.1 billion to $2.2 billion of EBITDA that could be dropped to the MLP at an appropriate pace based on a targeted distribution growth or capital financing needs.

The analyst adds that the company has a growth profile of 24 percent compounded annually through 2018, exceeding management's growth forecast of 20 percent plus.