Market Overview

Stifel: Antero Midstream Pullback, Valuation Of Consolidated Entity Create Compelling Entry Point

Share:
Stifel: Antero Midstream Pullback, Valuation Of Consolidated Entity Create Compelling Entry Point

Shares of Antero Midstream Partners LP (NYSE: AM), which owns, operates and develops midstream energy assets, have pulled back adequately enough to render the valuation attractive, according to Stifel.

The Analyst

Stifel's Timothy Howard upgraded Antero from Hold to Buy and assigned a $35 price target. 

The Thesis

Antero Midstream Partners units have lost about 10 percent since Stifel's Aug. 2 downgrade versus a less-than-1-percent gain in the Alerian Index, Howard said in the upgrade note. (See the analyst's track record here.) 

The consolidated Antero Midstream — assuming general partner Antero Midstream GP LP (NYSE: AMGP) buys it at no premium to Monday's close — is trading at 11.6 times Stifel's 2019 adjusted EBITDA estimate, the analyst said. 

This compares to a 12.6 times multiple at the time of Stifel's downgrade, Howard said.

"While uncertainty remains around Antero's strategic review outcome, we believe the pullback in AM and the consolidated entity's valuation creates a more compelling entry point," the analyst said. "Since Antero Resources Corp (NYSE: AR) activism drove this strategic review due to conflicts of interest, we believe investors are well served by aligning themselves with AR shareholders through AM units."

Citing an updated model for 10-Q segment level data, Stifel moderated its 2018 estimates for Antero Midstream Partners and said it expects adjusted EBITDA of $707 million and discounted cash flow of $577 million compared to its previous estimates of $710 million and $582 million, respectively. The firm slightly increased 2019 estimates.

Price Action

Antero Midstream Partners units have gained 8.7 percent year-to-date.

Related Links:

Natural Gas: Morgan Stanley's 2018 Outlook

Making The Natural Gas Trade Great Again

Latest Ratings for AM

DateFirmActionFromTo
Sep 2019MaintainsOutperform
Aug 2019DowngradesOutperformMarket Perform
Aug 2019ReiteratesOutperform

View More Analyst Ratings for AM
View the Latest Analyst Ratings

Posted-In: Stifel Timothy HowardAnalyst Color Upgrades Analyst Ratings Best of Benzinga

 

Related Articles (AM + AMGP)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SWKSCascendReiterates100.0
IBMWells FargoMaintains140.0
PNCWells FargoMaintains147.0
TWOUDA DavidsonMaintains17.0
IDYAOppenheimerInitiates Coverage On17.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Why Square Is Guggenheim's Top Fintech Pick

Eventbrite IPO Tracks With Growth In Music Festivals