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Barclays: Energy Transfer Partners offers "safe yield and growth prospects"

  • Energy Transfer Partners (ETP) offers "safe yield and growth prospects" for 2018 and beyond, Barclays says as it reiterates its Outperform rating and raises its price target to $48.
  • ETP will benefit from $10B of organic projects under execution, which Barclays sees adding close to $1B of distributable cash flow by 2019; "while we forecast debt to EBITDA to remain ~4.5x in 2016, we see this falling to low 4x in 2017-plus, which we think will help valuation," the firm writes.
  • The start-up of the Lone Star Express project in 2016 will bring 180K-280K bbl/day of new NGL pipeline capacity, and new projects "position ETP well in capturing volume upside from ethane recovery expected when new crackers come on line in 2017-2019," the firm says.
  • Barclays also notes that ETP continues to trade at a discount to key NGL players such as ONEOK Partners (OKS), DCP Midstream Partners (DPM) and Targa Resources (NYSE:TRGP); the firm thinks ETP's current yield of 11.82% reflects a 320 bps discount to the group.

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