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.”
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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:
- 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
- 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.