Boardwalk Pipeline may see value investors replaced dividend seekers

|About: Boardwalk Pipeline Partners... (BWP)|By:, SA News Editor

Boardwalk Pipeline Partners (BWP +7.1%) lost nearly half its value yesterday after slashing its payout by more than 80%, but some analysts see a buying opportunity amid the carnage.

Citigroup upgrades shares to Buy from Neutral, urging value investors to note the severity of yesterday’s move relative to where other midstream MLPs trade on a cash flow multiple basis; the firm figures BWP trades at 10.3x 2015 EBITDA and 9.4x 2016 EBITDA, more favorable than other midstream MLPs with similar challenges such as TC Pipelines (TCP) and Niska Gas Storage Partners (NKA).

Given the weaker outlook, Morgan Stanley says BWP/Loews (L) made the wisest choice to substantially reduce the distribution rate while remaining able to fund the capital plan internally, preserving maximum value.

Deutsche Bank is staying away, however, maintaining its Sell rating with a $12 price target (from $20), expecting a longer, slower restoration of distribution.