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What Analysts Recommend for DCP Midstream Ahead of 2Q16 Results

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Analyst ratings for DCP Midstream

In this article, we’ll look at what Wall Street analysts recommend for DCP Midstream Partners (DPM). 71.4% of analysts rate DCP Midstream Partners a “hold,” 14.3% rate it as “buy,” and the remaining 14.3% rate it a “sell.”

The above table shows recommendations for DPM from some of the brokers surveyed. The high and low target prices for DPM are $39 and $31, respectively. The median broker target price of $34.50 for DPM implies a 2.1% price return in the next 12 months from its June 26, 2016, closing price of $33.80. DPM peers EnLink Midstream Partners (ENLK) and Summit Midstream Partners (SMLP) have “hold” ratings from 53.3% and 60.0% of analysts, respectively. 50% of analysts rate Boardwalk Pipeline Partners (BWP) a “buy.”

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Outlook for DCP Midstream

Investors could consider the following positives and negatives before they decide to include DPM as a long-term investment.

Positives

  • strong support from its 50-50 joint venture sponsors, Phillips 66 (PSX) and Spectra Energy (SE)
  • can expect dropdown from its general partner, DCP Midstream LLC, in the future
  • strong fee-based NGL (natural gas liquid) logistics business

Negatives

  • flat distributions over the past several quarters
  • exposure to natural gas prices through natural gas midstream activities
  • DPM’s cash flows are majorly dependent upon throughput volumes with very low MVCs (minimum volume commitments) or take-or-pay contracts, and the declining Eagle Ford production affects DPM’s natural gas throughput volumes

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

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