uploads///Analyst Recommendation

Should You Include EQT Midstream Partners in Your Portfolio?

By

Dec. 4 2020, Updated 10:52 a.m. ET

Analyst ratings for EQT Midstream Partners

In this article, we’ll look at what Wall Street analysts recommend for EQT Midstream Partners (EQM). Around 90.9% of analysts rate EQT Midstream a “buy” while the remaining ~9.1% rate it a “hold.”

The median broker target price of $102.5 for EQT Midstream implies a ~32.6% price return in the next 12 months. EQT Midstream’s peers Western Gas Partners (WES), Antero Midstream Partners (AM), and Rice Midstream Partners (RMP) have “buy” ratings from ~92.9%, ~72.7%, and ~83.3% of Wall Street’s analysts, respectively. EQT Midstream constitutes ~3.1% of the Global X MLP ETF (MLPA).

Article continues below advertisement

Outlook for EQT Midstream

Investors can consider the following points before they decide to include EQT Midstream in their portfolio.

Positives

  • EQT Midstream has minimal direct commodity price exposure. More than 80% of EQT Midstream’s revenues in 2Q15 were tied to firm reservation contracts. We have discussed firm reservation contracts in the second part of this series.
  • There is strong growth in EQT Midstream’s third-party business. EQT Midstream’s third party revenue has grown at 62% CAGR (compound annual growth rate) since the company went public in 3Q12 through 2Q15. The partnership expects third-party revenues to grow three-fold by 2019.
  • The strong distribution growth guidance of 20% through 2017.
  • The presence of drop-down acquisition opportunities from its sponsor, EQT Corporation (EQT). EQT Corporation’s adjusted midstream EBITDA is expected to grow by 21% in three years. EQT Corporation would be investing $75–$100 million in 2015 and EQT Midstream might receive these midstream assets from its sponsor in the future.

Negatives

  • EQT Midstream has indirect commodity price exposure. If natural gas prices continue to stay low, producers might be discouraged to produce more. This could negatively impact EQT Midstream’s throughput volumes and earnings.
  • Midstream’s heavy dependence on its sponsor: EQT Corporation alone accounted for ~74% of EQT Midstream’s 2Q15 revenue.

For more pre-earnings coverage on midstream companies, check out our Master Limited Partnerships page.

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.