What Do Analysts Recommend for Breitburn Energy Partners?



Analysts’ ratings for Breitburn Energy

In this part, we’ll look at what Wall Street analysts recommend for Breitburn Energy Partners (BBEP). At a broader level, 72.7% of the analysts surveyed by Bloomberg rate Breitburn Energy a “hold,” 9.1% rate it a “buy,” and the remaining ~18.2% rate it a “sell.”

The median target price of $2.25 for Breitburn Energy implies an ~336.9% return from its February 26, 2016, closing price of $0.52. Breitburn Energy’s peers, EV Energy Partners (EVEP) and Vanguard Natural Resources (VNR) have “hold” ratings from 71.4% and 60.0% of analysts surveyed, respectively. It’s important to note that 88.9% of the analysts rated Linn Energy (LINE) as “sell.” Vanguard Natural Resources forms 3.37% of the First Trust ISE-Revere Natural Gas Index Fund (FCG).

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Individual ratings 

Here are some of the analysts’ recent ratings for Breitburn Energy:

  • Ladenburg Thalmann & Co, Janney Montgomery Scott LLC, UBS, Seaport Global Securities, and J.P. Morgan rated Breitburn Energy as “neutral.”
  • Hilliard Lyons rated Breitburn Energy a “buy.” It assigned the most optimistic price target of $10.
  • Wells Fargo Securities rated it as “underperform.” This is equivalent to “sell.”
  • FBR Capital Markets rated Breitburn Energy as “market perform.” This is equivalent to “hold.” It assigned Breitburn Energy a target price of $0.5.

Breitburn Energy’s outlook

In the short term, Breitburn Energy’s outlook seems bleak considering the recent fall in crude oil and natural gas prices with no sign of recovery and the company’s high leverage. The positive for Breitburn Energy is that the partnership took measures to lower the operating and general and administrative expenses.

Recently, Linn Energy announced that “it has initiated a process to explore strategic alternatives to strengthen its balance sheet and maximize the value of the Company.” Following this news, investors dumped Linn’s unit fearing that this process could lead to a bankruptcy filing. The sustained low price environment is definitely a challenge for smaller upstream players like Breitburn Energy and Linn Energy.

For more post-earnings coverage on midstream and upstream MLPs, visit Market Realist’s Master Limited Partnerships page.


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