Zacks Investment Research downgraded shares of Sunoco Logistics Partners, L.P. (SXL) from NEUTRAL to UNDERPERFORM on January 22, 2014, with a target price of $68.00.
Taking into account Sunoco Logistics' number of near-term challenges, we are recalibrating our investment thesis on the midstream energy partnership to Underperform from Neutral. In particular, narrowing crude differentials has adversely impacted Sunoco Logistics' recent profits, with the trend expected to continue during the upcoming quarters. Though we welcome the partnership's consistent distribution hikes, tepid demand for refined products and the difficult operating environment will be a drag on it's near to medium term outlook. Considering these headwinds, we expect Sunoco Logistics to perform below the industry, which gives investors little reason to hold the stock.
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