- Energy Transfer Equity (ETE) is upgraded to Buy from Neutral with a $20 price target, raised from $17, at BofA Merrill Lynch, which says it has more confidence in consolidation with Energy Transfer Partners (ETP) occurring in 2019 given increased clarity from management and an improved leverage outlook.
- BAML foresees strong performance for ETE and ETP unitholders, as the pro-forma entity should trade in-line with other large-cap, diversified stocks.
- The firm estimates a pro-forma leverage of 4.4x in its base case, which it says should allow the consolidated company to maintain an investment grade.
- BAML also maintains its Buy rating on ETP but trims its price target to $21 from $23.
- ETE-ETP would join the MLP consolidation party that today has included rollups of sponsored units by Williams Cos. and Enbridge (I, II).
- Source: Bloomberg First Word