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Morgan Stanley On Midstream Energy: 1 Upgrade, 3 Downgrades

Morgan Stanley On Midstream Energy: 1 Upgrade, 3 Downgrades - Dominion Midstream Partners LP NYSE:DM, Enterprise Products Partners L.P. NYSE:EPD

Morgan Stanley reviewed four companies in the midstream energy segment and found Kinder Morgan Inc KMI 2.32% as worth upgrading from an Equal-Weight to an Overweight rating. The brokerage also boosted its price objective on the company from $23 to $24.

Analysts led by Tom Abrams cited four pieces of support for downgrading the other companies. According to Abrams, "stabilization, scarcity value diminishing, volatility, and time frames lengthening" were the reasons behind the downgrades and subsequent price tag reductions.

"We see the postmerger cancellation return of ETE/ETP and WMB/WPZ as more viable independent midstream choices for investors as cathartic for the sector. All are large components of midstream indices and, after recent financial announcements, have significantly moved the sector perception to a more stable position," said Abrams.

Related Link: Credit Suisse And Morgan Stanley Present Some Incredible Charts On The Oil Complex

Kinder Morgan

Morgan Stanley expects 2018 to usher in better credit metrics and cash flows. Therefore, the brokerage believes the stock merits re-rating.

The lead analyst downgraded the stock from Overweight to Equal Weight. Similarly, the price objective of the stock has been slashed from $33 to $30, based on cash flow multiples reduction.

This is one of three stocks to get the downgrade rating from Overweight to Equal Weight from Morgan Stanley. The brokerage also reduced the price target from $40 to $30 citing a drop in target multiple.

One more stock in the downgraded list from Equal Weight to Underweight. The lead analyst cut the price tag from $73 to $69.

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DateFirmActionFromTo
Aug 2016Morgan StanleyDowngradesOverweightEqual-weight
Aug 2016BarclaysMaintainsOverweight
Apr 2016BarclaysAssumesOverweight

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