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What Analysts Recommend for Williams Partners

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Analyst ratings for Williams Partners

In this article, we’ll look at what Wall Street analysts recommend for Williams Partners (WPZ). On a broader level, 53.9% of analysts rate Williams Partners a “buy” and the remaining 46.2% rate it as a “hold.” The MLP has no sell recommendations.

The median broker target price of $33 for WPZ implies a 1.4% price return in the next 12 months from its June 13, 2016, closing price of $32.50. Among WPZ’s peers, Energy Transfer Partners (ETP) and Boardwalk Pipeline Partners (BWP) have “buy” ratings from 68.8% and 60.0%, respectively, of analysts surveyed by Bloomberg.

Plus, 60% of analysts rate EnLink Midstream Partners (ENLK) as a “hold.” WPZ’s general partner, Williams Companies (WMB), has “buy” and “hold” ratings from 46.2% and 46.2% of analysts, respectively.

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WPZ’s outlook

Williams Partners’s outlook looks bleak in the short term, considering its high leverage and the possible fallout of Energy Transfer Equity (ETE) and Williams Companies (WMB) merger. The Williams franchise would stand lose if the deal falls through before June 28 because WMB would owe ETE a breakup fee of ~$1.5 billion in that case.

Positives

  • There would be a significant project backlog.
  • The partnership is expected to benefit from the rise in natural gas demand from power utilities, LDCs (local distribution companies), and LNG export in the long run.

Negatives

  • The partnership is highly leveraged.
  • WPZ’s operating performance is negatively impacted by decline in gathering volumes due to production related shut-ins.
  • There is low distribution coverage.
  • There is high counterparty exposure.
  • There would be lower NGLs (natural gas liquids) margins due to lower NGLs prices.

For more company overviews and indicator analyses on master limited partnerships, you can refer to our Master Limited Partnerships page.

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