WGP Ranks Ninth among Its Peers in Terms of Upside Potential



Recent market performance

Western Gas Equity Partners (WGP), the MLP GP (general partner) of Western Gas Partners (WES), has fallen 11.1% since the start of this year. At the same time, WGP’s peers EnLink Midstream LLC (ENLC) and Antero Midstream GP (AMGP) have fallen 16.1% and 19.1%, respectively.

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Valuation analysis

Western Gas Equity Partners’ current distribution yield of 6.6% is higher than its one-year and five-year averages of 5.2% and 3.4%, respectively. WGP’s current discount to its historical levels could indicate its strong distribution guidance. The GP expects to grow its distribution by 12% in 2018—significantly more than the expected industry median of 4%.

Analysts’ target prices

Western Gas Equity Partners is in ninth place in terms of upside potential among the top midstream companies under review. The GP is currently trading below the low range ($35) of analysts’ target prices. WGP’s average target price of $44.8 implies a ~36% upside potential from its current price level.


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