In a report published Friday, Credit Suisse analyst John Edwards reiterated an Outperform rating on Tallgrass Energy Partners LP TEP, and raised the price target from $54.00 to $60.00.
In the report, Credit Suisse noted, "Tallgrass Development (TD), the parent of TEP, owns 50% in the REX pipeline, which is slated to become bidirectional and to more than double its capacity to an estimated 4.2bcf/d from the current 1.8bcf/d. REX currently generates $550-$575mm of annual EBITDA, likely rising to ~$750mm before falling back as contracts roll off by 2019. Together with another 33% of Pony Express to be dropped 1H15 at an expected $700mm and the last 33% in early 2016, TEP's drop down inventory likely stands at $3-$4B or more. Consequently, management is guiding to 20% annual distribution growth for 2015 and avg. CAGR of at least 20% through 2017 ‘or beyond'. We currently don't assign any value to TD's parent's Prairie State project."
Tallgrass Energy Partners LP closed on Thursday at $47.99.
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