Can Martin Midstream Partners Achieve Its Target Price Levels?

Recent market performance

Martin Midstream Partners (MMLP) is a midstream MLP involved in pipeline and marine transportation, terminaling, and storage of petroleum products. The partnership is engaged in the manufacturing, gathering, processing, marketing, and distribution of sulfur and sulfur-based products.

MMLP has seen new 52-week lows in its recent trading sessions. Overall, Martin Midstream Partners (MMLP) has lost 23.7% since the beginning of 2017.

Can Martin Midstream Partners Achieve Its Target Price Levels?

Valuation analysis

MMLP was trading at a distribution yield of 15.2% on December 6, 2017. This is higher than the one-year and five-year averages of 11.3% and 10.7%, respectively.

The partnership’s forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 8.1x is below the five-year average of 10.0x.

Analysts’ recommendations

MMLP currently ranks fifth among MLPs in terms of upside potential. MMLP’s average target price of $19.20 implies an ~47% upside potential from its current price levels. However, the partnership could be less likely to achieve its target price levels considering its weak earnings, high commodity price exposure, and high leverage.

MMLP was last downgraded by Stifel Nicolaus to “hold” in April 2017. Now, 66.7% of analysts surveyed by Reuters rate MMLP as a “hold,” and the remaining 33.3% rate it as “buy.”

In the next article, we’ll look into the upside potential for Alliance Resource Partners (ARLP).