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Why Rice Midstream Partners Could See Strong 2018 Income Growth

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Rice Midstream Partners

So far in this series, we’ve looked at six MLPs and how they’re expected to perform in 2018. They include Noble Midstream Partners (NBLX), EQT Midstream Partners (EQM), EQT GP Holdings (EQGP), Viper Energy Partners (VNOM), and TransMontaigne Partners (TLP). In this part, we’ll look at the fundamentals of Rice Midstream Partners (RMP).

Rice Midstream Partners (RMP) went through a rough patch in 2017 following the announcement of the EQT (EQT) merger with Rice Energy. Overall, the partnership fell ~13% last year. The weakness is continuing in 2018. It has fallen 1.5% since the beginning of the year. Despite this weakness, RMP’s current valuation is still higher than the peer median.

However, the partnership could still be a top performer among MLPs in 2018. That’s due to RMP’s strong expected earnings growth, strong expected distribution growth, and low leverage. Its current valuation is below the historical average.

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Analyst recommendations

About 63.6% of analysts rate RMP a “hold” as of January 5, 2018, while the remaining 36.4% rate it a “buy.” RMP’s peers EQT Midstream Partners and Antero Midstream Partners (AM) have “buy” ratings from 86.7% and 100% of analysts, respectively. RMP’s average target price of $22.60 implies a ~4% upside potential from the current price levels.

In the next part, we’ll look at the fundamentals of Phillips 66 Partners (PSXP).

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