Zacks Investment Research downgraded shares of Magellan Midstream Partners, L.P. (MMP) from OUTPERFORM to NEUTRAL on November 07, 2012, with a target price of $46.00.
Following Magellan Midstream's weak third quarter showing, we are downgrading the oil pipeline and storage partnership to Neutral from Outperform. The Tulsa, Oklahoma-based firm recently posted dull September quarter results on the back of poor contributions from all its business units. We believe that the operating scenario for pipeline operators will remain critical in the near to medium term. Magellan is also susceptible to lower-than-expected demand for refined products, commodity price fluctuations and cost overruns on expansion projects. However, we acknowledge the partnership's strong portfolio of energy infrastructure assets, capacity expansion plans and a sound liquidity position. Other positive attributes include its investment grade rating and strong track record for distribution growth.
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