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Deutsche Bank starts KMI and MLPs EPD, ETP, SMLP, MPLX, SXL, PSXP at Buy

May 18, 2015 5:32 PM ETKinder Morgan, Inc. (KMI) StockKMI, EPD, SXL, PSX, SMLP, MPLX, ETBy: Carl Surran, SA News Editor21 Comments
  • Deutsche Bank initiates some energy MLPs with Buy ratings, as well as Kinder Morgan (NYSE:KMI), which the firm says "has the footprint, financial scale and management team to capitalize on the nation's need for midstream."
  • KMI, rated Buy with a $49 price target, has a presence across every midstream vertical and in every major basin, which Deutsche Bank says means that investors should use it to buy into the buildout of U.S. energy infrastructure rather than merely to gain exposure to a certain asset type or shale play.
  • Among MLPs, Enterprise Products Partners (NYSE:EPD) "is a stock to own, not trade," with its integrated business model, visible growth backlog, low cost of capital, and management's track record of successful innovation; EPD is rated Buy with a $38 price target.
  • Energy Transfer Partners (ETP) is rated Buy with a $67 target because of visibility on an $11B organic backlog, which the firm believes will support high single-digit distribution/unit growth through 2017; near-term, the firm expects synergies following the recently closed merger with Regency to provide upside.
  • Summit Midstream Partners (NYSE:SMLP) is rated Buy with a $34 target, as contract structures provide more near-term cash flow protection than peers while drop-down from P-E backed parent Summit Investments and ramping organic spending should drive high single-digit DPU growth near-term.
  • The firm says it has a "high conviction" in its new Buy rating and $95 target for MPLX, citing multi-year visibility into 25%-plus distribution growth guidance - which the firm sees as conservative - and a stable fee-based earnings profile.
  • Also started at Buy: SXL, PSXP

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