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How Williams Partners Is Placed in 2017 and Beyond

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Part 11
How Williams Partners Is Placed in 2017 and Beyond PART 11 OF 11

WPZ Has a 10.8% Upside Potential Upside from Here

Analysts’ ratings for Williams Partners

In this article, we’ll look at what Wall Street analysts recommend for Williams Partners (WPZ). At a broader level, 56.0% of analysts rate Williams Partners as a “buy,” and the remaining 44.0% rate it as a “hold.”

WPZ Has a 10.8% Upside Potential Upside from Here

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The average broker target price of $43.5 for WPZ implies a 10.8% price return in the next 12 months from its March 14, 2017, closing price of $39.3. 

WPZ’s peers Spectra Energy Partners (SEP) and Boardwalk Pipeline Partners (BWP) have “buy” ratings from 64.7% and 57.1% of analysts surveyed by Reuters, respectively. A total of 69.2% of analysts rate ONEOK Partners (OKS) as a “hold.”

Outlook for Williams Partners

Investors may want to consider the following positives and negatives before deciding whether to include WPZ as a long-term investment:

Positives

  • significant project backlog
  • measures being taken to strengthen its balance sheet
  • improved cost of capital via the removal of IDRs (incentive distribution rights) from its capital structure
  • expected benefits from rising natural gas demand from power utilities, LDCs (local distribution companies), and LNG exports in the long term
  • strong natural gas supply growth in the northeast expected to drive the Williams Northeast gathering and processing business

Negatives

  • highly leveraged
  • distribution cuts and low coverage
  • dilution from financial repositioning deal
  • throughput volume fall due to production-related shut-ins in some regions
  • high NGLs exposure, which is expected to come down slightly with asset sales

For more information on midstream companies, check out Market Realist’s Master Limited Partnerships page.

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