We are upgrading our recommendation on Enterprise Products Partners (EPD) to Outperform from Neutral. The partnership, which remains a core holding in a MLP portfolio, focuses on projects that generate stable cash flow and contribute to its integrated value chain.
We believe the Haynesville Acadian Expansion and Eagle Ford projects will allow Enterprise to take a lead role in the development of natural gas liquids and natural gas infrastructure. While Enterprise increased its cash flow distribution by 5.2% in the third quarter, it also deployed cash in various fee-based development projects that will likely generate operating cash flow to support its future distribution growth.
As such, we rate Enterprise Products Partners units as an attractive investment and upgrade it to Outperform. Our $54 target price, 26.0x 2011 earnings per unit, corroborates this view.
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