Why Most Analysts Recommend a ‘Hold’ for Enbridge Energy Partners
Price targets for EEP
The Reuters analyst consensus target price for Enbridge Energy Partners (EEP) is $18. The median target price implies an 11% price return in a year from EEP’s current price of $16.27. 82% of the analysts surveyed rated Enbridge Energy Partners a “hold,” and 18% rated it a “buy.” None of the surveyed analysts rated EEP a “sell.”
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The above graph shows the changes in analysts’ recommendations for EEP over the last one year. As the graph shows, the number of “buy” recommendations for EEP fell, whereas “hold” recommendations increased over the last 12 months.
The high number of “hold” recommendations likely indicates analysts’ expectations of average performance for EEP over the next year. They don’t expect much upside from current levels.
In comparison, 96% of analysts rated Enterprise Products Partners (EPD) as a “buy,” and 77% of analysts rated Williams Partners (WPZ) as “buy.” Learn which MLPs are analysts’ favorite in The Top 7 MLPs According to the Analysts.
While Enbridge Energy Partners’ yield looks attractive, its leverage remains concerning. The sale of its poorly performing natural gas business should be a positive development for EEP in the long term. EEP’s constrained earnings growth is another concern, though it should get better as energy prices and demand-supply dynamics improve and new projects come into service.