Analysts’ ratings for WMB and WPZ
In this part, we’ll look at what Wall Street analysts recommend for Williams Companies (WMB) and Williams Partners (WPZ). On a broader level, 57.1% of analysts rate Williams Companies as a “buy,” 35.7% rate it as a “hold,” and 7.2% rate it as a “sell.” At the same time, Williams Partners has been rated as a “hold” by 57.1% of the analysts surveyed. The remaining 42.9% rate it as a “buy.” The MLP doesn’t have any “sell” recommendations.
The median broker target price of $26 and $37.5 for Williams Companies and Williams Partners implies a 15.4% and 8.1% price return in the next 12 months from their August 1, 2016, closing price of $22.5 and $34.7, respectively. Williams Companies’ peer, Energy Transfer Equity (ETE) has “hold” ratings from 50.0% of the analysts.
Outlook for Williams Companies
Williams Companies’ outlook depends on Williams Partners’ ability to grow its distributable cash flows and distributions. Below are few positive and negatives for the Williams franchise.
- It has a significant project backlog.
- Williams Companies and Williams Partners are expected to benefit from the rise in natural gas demand from power utilities, local distribution companies, and LNG exports in the long run. According to Alan Armstrong, Williams Companies’ CEO, “In 2018, we expect to have twice as much fully-contracted capacity on Transco as we did in 2010. Quarter after quarter, the significant advantages of increased fee-based revenues are evident as we bring demand-driven projects into service. Additionally, as we execute on current projects, our assets continue to attract a steady number of requests for new market area capacity.” Transco is the wholly owned subsidiary of Williams Partners.
- Both Williams Companies and Williams Partners are highly leveraged
- Williams Companies announced a distribution cut.
- Williams Partners’ operating performance is negatively impacted by several production shut-ins across its Central and Northeast G&P segments.
- Williams Partners has low distribution coverage.
- Williams Partners has high counterparty exposure.
For more post-earnings coverage on midstream companies, visit Market Realist’s Master Limited Partnerships page.