Baird Sees Antero Midstream As An 'Undervalued Long-Term Growth' Play; Upgrades To Outperform

Baird's Ethan Bellamy upgraded

to Outperform, raising the target price to $38.00. After the analyst's "dinner with management," the analyst constructed a high degree of conviction on long term volume growth "which underpins the 30% CAGR in distributions we expect through 2018." The analyst thought tightening oil and gas supply in combination with high guidance of volume growth, would lead to a base case rather than a bear case. Additionally, the analyst was impressed with Antero's option it exercised to purchase a "15% non-op equity interest in the Stonewall gathering pipeline." "Stonewall came on-line on 12/1/15 with 1.4 Bcf/d of capacity, allowing

to move gas production to markets priced more favorably than Dominion South" said Bellamy. At the time of writing, Antero Midstream Partners traded at $24.88.