Spectra Energy Partners Has Fallen 22% Year-to-Date in 2015
(Continued from Prior Part)
SEP’s 2015 guidance
Spectra Energy Partners (SEP) announced its guidance for the year 2015 in February 2015. It expected distributable cash-flows of $1.1 billion for 2015 with a CAGR (compound annual growth rate) of 12.7% through 2017.
SEP targeted a distribution increase of 1.3 cents each quarter through 2017 and coverage of 1.1x in 2015. SEP forms 2.8% of the Alerian MLP ETF (AMLP), an ETF of top infrastructure MLPs.
SEP’s performance
Spectra Energy Partners’ distributable cash-flows for the nine months ended September 30, 2015, are $945 million. It will exceed its target for the year if its 4Q15 distributable cash-flows are higher than $155 million. Looking at its past quarterly distributable cash-flows trend, this target seems very much achievable.
SEP increased its quarterly distributions by 1.3 cents in each of the first three quarters of 2015. Thus, the MLP is on-track to meet this guidance too. Its coverage ratio for the first nine months of 2015 is 1.3x.
“With virtually no volume or commodity exposure, Spectra Energy Partners is a low risk midstream MLP, which has allowed us to provide quarterly distribution growth for our investors over the last eight years,” said Greg Ebel, chief executive officer of Spectra Energy Partners, in SEP’s 3Q15 earnings release.
Price targets for SEP
As the above graph shows, the median target price for SEP in one year provided by the analysts surveyed by Bloomberg is $55. The low and high target prices for the stock over the same period are $42 and $61, respectively. The median target price implies a 24% price return in a year from SEP’s current price of $44.49.
About 56% of the analysts surveyed have rated Spectra Energy Partners a “buy,” while 38% have rated it a “hold,” and 6% have rated it a “sell.”
As for other midstream companies, 50% rated Spectra Energy (SE) a “buy,” and 50% rated Enbridge Energy Partners (EEP) a “buy.” About 25% of the analysts surveyed rated ONEOK (OKE) a “buy.”
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