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Analyzing Williams Partners’ Geismar Olefins Plant Sale

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Part 4
Analyzing Williams Partners’ Geismar Olefins Plant Sale PART 4 OF 4

How Wall Street Analysts View Williams Partners

Analyst ratings for Williams Partners

In this final part of the series, we’ll see what Wall Street analysts are recommending for Williams Partners (WPZ). On a broader level, 58.0% of analysts rate Williams Partners a “buy,” and the remaining 42.0% rate it a “hold.” WPZ was recently upgraded by Citigroup to a “buy” from “neutral,” which is equivalent to a “hold.”

How Wall Street Analysts View Williams Partners

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The average broker target price of $44.10 for WPZ implies a 7.6% price return in the next 12 months from its March 17, 2017, closing price of $40.98. WPZ’s peers Energy Transfer Partners (ETP) and Boardwalk Pipeline Partners (BWP) have “buy” ratings from 68.4% and 61.5%, respectively, of analysts surveyed by Reuters. About 76.9% rate Oneok Partners (OKS) a “hold.”

Outlook for Williams Partners

Before deciding to include Williams Partners (WPZ) as a long-term investment, you should consider the following positives and negatives. Let’s look first at the company’s positives:

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

Now let’s look at some negatives:

  • throughput volume decline due to production related shut-ins in some regions
  • distribution cuts and lower distribution coverage

For more coverage on midstream companies, be sure to check out Market Realist’s Master Limited Partnerships page.

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