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55% of Analysts Rated Enbridge Energy Partners a “Buy”

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Analyst recommendations for EEP

Of the analysts surveyed by Bloomberg, 55% rated Enbridge Energy Partners (EEP) a “buy,” and 45% rated it a “hold.” None of the analysts rated it a “sell.” The consensus target price for Enbridge Energy Partners is $34.40. EEP units currently trade near $28.60.

If the MLP does attain this target price within a year, it would mean a 20.4% price return for investors. Prior to the earnings release, 43% of the analysts had rated EEP a “buy.”

The table above shows the recommendations and target prices for Enbridge Energy Partners from some of the brokers that were surveyed. Enbridge Energy Partners forms ~1% of the Guggenheim Multi-Asset Income ETF (CVY).

As for its peers, 81% of analysts rated Magellan Midstream Partners (MMP) a “buy,” 69% rated Plains All American Pipeline (PAA) a “buy,” and 31% rated ONEOK Partners (OKS) a “buy.”

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Outlook for EEP

Mark Maki, president and principal executive officer of Enbridge Energy Partners, noted during the earnings release, “Enbridge continues to evaluate the offering of selective drop-down opportunities to EEP of approximately $500 million annually from 2016 through 2019. This drop-down program, along with the existing options for EEP to increase its interests in certain projects jointly funded with Enbridge, at book-value, provide momentum for the Partnership to deliver distribution growth above its current 2 to 5 percent annual growth target.”

Enbridge Energy Partners had earlier suggested that a large-scale dropdown from Enbridge Inc. (ENB) may not be initiated in 2015 given the market conditions. This may have made analysts and investors doubtful about the possibility and the size of future dropdowns as well. EEP’s affirmation about sponsor Enbridge’s ongoing evaluation of dropdown opportunities likely alleviated some fears.

EEP expects continued high utilization of its pipeline systems. It currently has more than $10 billion of liquids pipeline organic growth projects under various stages of development. The MLP could benefit from its ongoing capital growth projects.

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