Seeking Alpha

Rose Rock target raised at UBS, as truck deal supports investment thesis

  • Rose Rock Midstream (RRMS +3.7%) enjoys strong gains a day after announcing the acquisition of crude oil trucking assets from Chesapeake Energy.
  • UBS maintains its Buy rating on RRMS and raises its price target to $49 from $46; financial terms were not disclosed, but the firm estimates RRMS will pay ~$50M at a ~5.5x multiple, similar to its Barcas trucking acquisition given similar size and location of assets (Briefing.com).
  • UBS says the deal supports its thesis that RRMS will increase distributions at a mid-teens compound annual growth rate over the next three years, driven by organic growth investments and acquisitions.
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