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Morgan Stanley On Midstream Energy: 1 Upgrade, 3 Downgrades

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Morgan Stanley On Midstream Energy: 1 Upgrade, 3 Downgrades
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Morgan Stanley reviewed four companies in the midstream energy segment and found Kinder Morgan Inc (NYSE: KMI) as worth upgrading from an Equal-Weight to an Overweight rating. The brokerage also boosted its price objective on the company from $23 to $24.

Analysts led by Tom Abrams cited four pieces of support for downgrading the other companies. According to Abrams, "stabilization, scarcity value diminishing, volatility, and time frames lengthening" were the reasons behind the downgrades and subsequent price tag reductions.

"We see the postmerger cancellation return of ETE/ETP and WMB/WPZ as more viable independent midstream choices for investors as cathartic for the sector. All are large components of midstream indices and, after recent financial announcements, have significantly moved the sector perception to a more stable position," said Abrams.

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Kinder Morgan

Morgan Stanley expects 2018 to usher in better credit metrics and cash flows. Therefore, the brokerage believes the stock merits re-rating.

Enterprise Products Partners L.P. (NYSE: EPD)

The lead analyst downgraded the stock from Overweight to Equal Weight. Similarly, the price objective of the stock has been slashed from $33 to $30, based on cash flow multiples reduction.

Dominion Midstream Partners LP (NYSE: DM)

This is one of three stocks to get the downgrade rating from Overweight to Equal Weight from Morgan Stanley. The brokerage also reduced the price target from $40 to $30 citing a drop in target multiple.

Magellan Midstream Partners, L.P. (NYSE: MMP)

One more stock in the downgraded list from Equal Weight to Underweight. The lead analyst cut the price tag from $73 to $69.

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Latest Ratings for DM

DateFirmActionFromTo
Feb 2018Wells FargoMaintainsMarket PerformMarket Perform
Jan 2018Stifel NicolausReinstatesBuy
Dec 2017JP MorganDowngradesOverweightNeutral

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