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What Do Analysts Recommend for NGL Energy Partners?

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Analyst ratings for NGL Energy

In this article, we’ll look at what Wall Street analysts recommend for NGL Energy Partners (NGL). 62.5% of analysts rate NGL Energy a “buy,” 12.5% rate it a “hold,” and the remaining 25.0% rate it a “sell.”

The median broker target price of $18 for NGL implies a -7.7% price return in the next 12 months from its closing price of $19.50 on June 28, 2016. Peers Sunoco Logistics Partners (SXL) and Buckeye Partners (BPL) have “buy” ratings from 58.8% and 50.0% of analysts surveyed by Bloomberg. 66.7% of analysts rate Rose Rock Midstream (RRMS) as a “hold.” Amerigas Partners (APU) has “sell” recommendations from 30% of analysts.

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Outlook for NGL Energy

Investors can consider the following positives and negatives before they decide to include NGL as a long-term investment:

Positives

  • NGL Energy’s refining product throughput volumes have continued to grow due to low gasoline prices
  • the partnership benefits from the current contango market conditions
  • lower expected winter temperatures in 2016, which could drive propane and butane demand higher, benefiting NGL Energy’s Liquids and Retail Propane segments

Negatives

  • following the Brexit vote, crude oil volatility is expected to increase, making NGL Energy riskier
  • lower crude oil drilling activity despite the slight crude oil price recovery, which impacts NGL’s water volumes and crude oil throughput volumes
  • volatile cash flows due to high commodity price exposure and seasonality
  • distribution cuts
  • highly leveraged

For details on investment options following Brexit, read Brexit Vote: Which Midstream MLP to Invest in and Brexit Turmoil: Is It a Good Time to Add MLPs to Your Portfolio? For more MLP analysis, you can refer to our Master Limited Partnerships page.

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