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Credit Suisse Upgrades Enterprise Products Partners To Outperform

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Credit Suisse Upgrades Enterprise Products Partners To Outperform

Credit Suisse upgraded Enterprise Products Partners L.P. (NYSE: EPD) to Outperform from Neutral, saying the recent drop in share price offers an attractive entry into a long-term core holding.

Over the past three months, shares of Enterprise fell more than 6 percent versus S&P 500's +3.27 percent. The brokerage, however, maintains its $34 target price, implying a potential return of about 36 percent.

"We believe EPD offers a solid risk/reward proposition given the MLP's conservative distribution policy (~1.30x coverage in 2016–2019), high quality & interconnected asset footprint, and best in class management team," analyst John Edwards wrote in a note.

Related Link: Evercore ISI Group Initiates Coverage On Enterprise Products At Buy

Meanwhile, the market is still pricing the possibility of Enterprise buying Williams Companies Inc (NYSE: WMB) at an aggressive price, despite both sides confirming that the M&A talks have ended.

"We believe if talks resume EPD is unlikely to consider terms which would be value destructive or dilutive," Edwards continued.

"EPD has lot of legroom before a prospective deal becomes dilutive, suggesting that investor concerns on this topic are overblown," the analyst added.

In addition, Edwards pointed to the company's $5 billion plus backlog, which provides a solid basis for future growth as well as his five-year distribution CAGR of 5.5 percent. The analyst noted that the company gets stable cash flows from its suite of inter-connected assets, while additional upside would come from smaller opportunistic M&A and crude/condensate side.

Shares of Enterprise Products closed Friday's regular trading session at $26.01.

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Latest Ratings for EPD

DateFirmActionFromTo
Apr 2019Goldman SachsUpgradesNeutralBuy
Nov 2018MizuhoInitiates Coverage OnBuy
Nov 2018CitigroupMaintainsBuyBuy

View More Analyst Ratings for EPD
View the Latest Analyst Ratings

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