Seeking Alpha

Atlas Pipeline -3% after earnings miss, Barclays downgrade

  • Atlas Pipeline Partners (APL -3%) falls for a second straight day following a disappointing Q4 earnings report, and Barclays today downgrades APL to Equal Weight from Overweight and cuts its price target to $35 from $41.
  • Barclays notes that APL reduced its previous 2014 guidance by 13% and pushed it out by a year; upside or downside to forecasts will come mostly from realized volume performance, as a majority of APL's 2014 commodity price exposure is hedged, but the firm sees execution risk given a lack of signed contracts to support visibility.
  • APL's Q4 operating expenses jumped 61% Y/Y, and gross margin fell to 20.6% from 22.6% in the prior-year quarter.
Comments (3)
  • Barclays late to the party again. Nothing new there.

     

    Buy APL and clip over 8% while you wait for the Eagle Ford buildout to take place.

     

    Ignore Barclays.
    19 Feb, 12:36 PM Reply Like
  • Completely agree. Their reduced guidance includes no new assets over the next year either, which they implied on the call are very likely coming. Management lowered the bar to a point where they will easily exceed for next several quarters and end the year with distribution hikes.

     

    Barclays, Stifel, Morgan Stanley all missing the fact that the unit price already reflects their under-capacity issue and priced at 8.2% current yield. They're like sheep.
    19 Feb, 02:54 PM Reply Like
  • Unless Management is willfully deceiving investors APL is undervalued at this yield, even if there is no increase in distributions in 2014.
    With a small increase in distributions the yield becomes so anomalous compared to the peer group that either APL's debt is becoming toxic or its price must rise.
    The question for investors is whether gross margin increases are capable of supporting distributions or whether high debt is being used to cannibalize payout from 2015.
    IS APL another Boardwalk or is it another EPB?
    19 Feb, 04:47 PM Reply Like
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