Morgan Stanley sees limited Kinder Morgan distribution growth upside

|About: Kinder Morgan Energy Partne... (KMP)|By:, SA News Editor

Kinder Morgan Partners (KMP -0.8%) is reiterated with an Underweight rating and $82 price target at Morgan Stanley, which says it can't see KMP outperforming peers on distribution growth that is below the industry average.

Acknowledging KMP's cash flow stability from quality pipeline assets and geographic diversity, the firm sees accretion via projects and acquisitions as limited by a large asset base and a high general partner cash incentive share (45%-plus) which caps distribution growth upside.

The firm says KMP's oil production business (15%-20% of cash flow) creates material future asset/reserve replacement risk, and dropdowns from KMI (into KMP and EPB) likely will be finished by 2014, creating the need to continue to develop new organic projects.

KMI +1.2%, KMR +0.5%, EPB +2.2%.