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Behind Noble Midstream Partners’ Top 7 MLP Position

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NBLX’s analyst recommendations

Noble Midstream Partners (NBLX), the midstream MLP (master limited partnership) formed by Noble Energy (NBL) to provide to crude oil, natural gas, and water-related midstream services, comes in seventh place in terms of the highest “buy” rating percentage among MLPs. Notably, 89% of analysts surveyed by Wall Street analysts rate NBLX a “buy,” while the remaining 11% rate it as a “hold.”

Notably, Mizuho last downgraded NBLX to “neutral,” which is equivalent to a “hold.” This is the only rating update that the partnership has seen in 2017. NBLX

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NBLX has very low upside potential, however. NBLX’s average target price of $55.9 implies a 7% upside potential from its current price levels. This could be attributed to NBLX’s strong YTD gains. The partnership has risen 45% in 2017 to date. At the same time, the Alerian MLP ETF (AMLP) has lost 11.1%.

Valuation analysis

NBLX was trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) of 9.8x as of September 28, 2017—below its historical average of 10.3x and below the peer median multiple of 9.9x.

NBLX’s current distribution yield of 3.2% is below the historical average of 3.6%. NBLX’s current valuation reflects its strong throughput volume growth, strong distribution growth, low leverage, and strong support from its sponsor, Noble Energy.

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