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Why Magellan Midstream Partners Continues to Attract Investors

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Part 8
Why Magellan Midstream Partners Continues to Attract Investors PART 8 OF 8

Analysts Expect 11% Upside for Magellan Midstream Partners

Magellan Midstream Partners’ target prices

The consensus target price for Magellan Midstream Partners (MMP), provided by the analysts surveyed by Reuters, is $78.5. The median target price implies an 11% price return in a year from Magellan Midstream Partners’ current price of $70.81. It’s important to note that 19% of the analysts rated Magellan Midstream Partners stock as a “strong buy,” 25% rated it as a “buy,” 44% rated it as a “hold,” and 12% rated it as a “sell.”

Analysts Expect 11% Upside for Magellan Midstream Partners

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On September 21, 2017, Citigroup raised its rating on Magellan Midstream Partners to “buy” from “neutral.”

The above chart shows the changes in analysts’ recommendations for Magellan Midstream Partners in the last 12 months. As the above graph shows, quite a few “buy” and “strong buy” recommendations were replaced with “hold” recommendations during this period.

Peer ratings

In comparison, 96% of the analysts rated Enterprise Products Partners (EPD) as a “buy,” 72% of the analysts rated Williams Partners (WPZ) as a “buy,” and 82% of the analysts rated Energy Transfer Partners (ETP) as a “buy.”

Magellan Midstream Partners’ consistent distribution growth and strong coverage contribute to higher investor confidence for the stock. The company’s metrics look strong. Magellan Midstream Partners’ comparatively fewer “buy” recommendations likely reflect the stock’s significant outperformance compared to its peers in the last few years, which limits its upside potential.

However, investors might find Magellan Midstream Partners’ yield attractive, which could compensate for its limited upside potential and offer an attractive total return proposition.

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