Recent market performance
Antero Midstream Partners (AM) is a midstream MLP primarily involved in natural gas gathering, natural gas compression, and water-related midstream services in the Appalachian Basin. The partnership recently entered the natural gas processing business through a JV (or joint venture) with MPLX LP (MPLX).
Antero Midstream Partners saw a new 52-week low during the recent plunge in the midstream sector. However, it has recovered significantly since then. Overall, Antero Midstream Partners has lost 8.4% since the beginning of this year.
Antero Midstream (AM) was trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 8.7x on December 6, 2017. This is significantly below the historical average of 13.9x. Antero Midstream’s current distribution yield of 4.8% is also higher than the historical average of 3.6%.
The partnership’s current valuation could indicate a buying opportunity considering its low commodity price exposure, significant presence in the prolific Marcellus Shale, industry-leading distribution growth, healthy distribution coverage, and low leverage.
Antero Midstream (AM) ranks eighth in terms of upside potential among MLPs. It is currently trading significantly below the low range ($34.00) of analysts’ target prices. AM’s average target price of $38.70 implies an ~37% upside potential from its current price levels.
The partnership has “buy” ratings from 100.0% of analysts surveyed by Reuters. Antero Midstream is the only Alerian MLP ETF (AMLP) constituent to receive “buy” ratings from 100% of analysts. Of the total 16 analysts covering the stock, eight analysts rate it as “buy” and the remaining eight rate it as a “strong buy.”
In the next article, we’ll look into the upside potential for Genesis Energy (GEL).