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Weekly Recap: Analyzing MLPs in the Week Ending September 22

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Part 4
Weekly Recap: Analyzing MLPs in the Week Ending September 22 PART 4 OF 5

Magellan Midstream Partners Was Upgraded Last Week

Magellan Midstream Partners

Magellan Midstream Partners (MMP) was the only MLP that saw a rating update in the week ending September 22. In the previous week, Teekay Offshore Partners (TOO) was the only MLP that saw a rating change. To learn more, read Teekay Offshore Partners’ Upgrade Last Week.

Citigroup upgraded Magellan Midstream Partners from “neutral” to “buy.” The partnership has seen six rating updates in the past four months—three upgrades, two downgrades, and one new coverage to hold. Recently, Magellan Midstream Partners formed a joint venture with Valero Logistics to build a 135-mile pipeline from Houston to Hearne, Texas. For more details, read Valero’s Logistics Growth in Focus: New Pipelines and Terminals.

Magellan Midstream Partners Was Upgraded Last Week

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Now, 47% of the analysts surveyed by Reuters rate Magellan Midstream Partners as a “buy,” 41% rate it as a “hold,” and 12% rate it as a “sell.” Magellan Midstream Partners’ “sell” rating despite high distribution growth and low coverage could be attributed its high valuation. For a relative valuation analysis of the four largest US MLPs, read How Energy Transfer Partners’ Valuation Stacks Up with Peers.

Magellan Midstream Partners’ peers, Phillips 66 Partners LP (PSPX) and Shell Midstream Partners (SHLX) have “buy” ratings from 62.5% and 55.6% of the analysts, respectively. Currently, Magellan Midstream Partners is trading close to the low range ($70) of analysts’ target prices. Its average target price of $79.1 implies 13% upside potential from the current price levels.

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