Zacks Investment Research downgraded shares of Energy Transfer Partners, L.P. (ETP) from NEUTRAL to UNDERPERFORM on February 25, 2013, with a target price of $43.00.
Despite Energy Transfer Partners' fourth quarter profit beat, we are changing our investment thesis on the natural gas transportation and storage partnership to Underperform from Neutral. With natural gas prices likely to remain soft in the near- to medium-term, Energy Transfer Partners' margins are expected to suffer in the next few quarters. The lack of fee-based contracts – that guarantees stable cash flows – has also been a negative. Furthermore, we expect units of Energy Transfer Partners to remain depressed until it raises its distribution – static since 2008. Considering these headwinds, we expect Energy Transfer Partners to perform below the industry, which gives investors little reason to hold the stock.
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