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Wall Street Targets for Magellan Midstream ahead of 2Q15 Results

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Wall Street targets for MMP

Of the analysts surveyed by Bloomberg, 65% rate Magellan Midstream (MMP) a “buy” and 35% rate it a “hold.” There are no “sell” recommendations for the MLP. The consensus target price for the MLP is $89.50. It’s currently trading at $72.90. If the stock indeed attains this target price within a year, it would mean a 23% return for investors.

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Individual ratings

Some broker recommendations and target prices are discussed here:

  • Morgan Stanley (MS) recommends Magellan Midstream as a “hold” and sets a target price of $79 within a year. This target would imply an upside of 8.4% based on its current price.
  • Wunderlich Securities and RBC Capital Markets both recommend the stock as a “buy” with a target price of $89. This is close to the consensus price of all analysts for MMP.
  • Ladenburg Thalmann recommends Magellan Midstream as a “strong buy” with a target price of $94. This would mean an upside of 29% in a year.

The above table shows recommendations and target prices for Enterprise Products from some of the brokers surveyed. Enbridge Energy Partners (EEP) has “hold” ratings from 67% of the surveyed analysts. 89% of the analysts rate Enterprise Products Partners (EPD) a “buy.” EPD forms 9.9% of the Alerian MLP ETF (AMLP) and is is the largest holding. Both AMLP and the ETRACS Alerian MLP Infrastructure ETN (MLPI) track the Alerian MLP Infrastructure Index (AMZI).

MMP’s key growth projects

MMP’s key growth projects include the Saddlehorn pipeline, in partnership with Plains All American (PAA) and Anadarko Petroleum (APC). The Saddlehorn pipeline and other projects such as the Corpus Christi splitter, the Little Rock pipeline, and capacity expansion at the East Houston terminal are expected to boost the MLP’s revenue growth over the next couple of years. The analyst recommendations we’ve discussed most likely account for this expected growth.

Buckeye Partners (BPL) and NuStar Energy (NS) are other MLPs involved in crude oil and refined products transport and storage. BPL will report its 2Q15 earnings on July 31. NS reported its 2Q15 earnings on July 24.

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