The benefits of the deal to the partnership are
discussed in a Raymond James report.
In a June 10 research note, Raymond James analyst Justin Jenkins reported
that Martin
Midstream Partners L.P. (MMLP:NASDAQ) agreed to sell Cardinal Gas
Storage, its Arcadia, Cadeville, Monroe and Peryville assets, to the private
company Hartree Cardinal Gas for $215 million in cash.
The Cardinal assets comprise about 50 billion cubic feet of storage
capacity in Mississippi and northern Louisiana. Closing of the transaction is
expected at the end of Q2/19.
Jenkins noted the divestiture should achieve two ends for Martin
Midstream: stabilize its balance sheet and improve its equity performance.
The master limited partnership's reason for the assets sale was to delever
its balance sheet and focus solely on its refinery services operations.
Indeed, Jenkins wrote, the transaction should significantly reduce leverage,
particularly because the assets are to be sold "at an attractive roughly
10.5x multiple," generating more revenue than expected.
In turn, the leverage reduction should boost the stock price, currently
$6.63 per share, over time. This "should be welcome news to investors
after the stock's difficult run over the past few weeks (down 8.2% last week
and 17.2% in the past month)," Jenkins commented.
The next catalyst for the partnership, Jenkins noted, is stability of
Q2/19 earnings.
Raymond James has an Outperform rating on Martin Midstream.
[NLINSERT]
Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and
provides services to Streetwise Reports as an independent contractor. She or
members of her household own securities of the following companies mentioned
in the article: None. She or members of her household are paid by the
following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors
of Streetwise Reports: None. Click here
for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not
of Streetwise Reports or its officers. The information provided above is for
informational purposes only and is not a recommendation to buy or sell any
security.
4) The article does not constitute investment advice. Each reader is
encouraged to consult with his or her individual financial professional and
any action a reader takes as a result of information presented here is his or
her own responsibility. By opening this page, each reader accepts and agrees
to Streetwise Reports' terms of use and full legal disclaimer.
This article is not a solicitation for investment. Streetwise Reports does
not render general or specific investment advice and the information on
Streetwise Reports should not be considered a recommendation to buy or sell
any security. Streetwise Reports does not endorse or recommend the business,
products, services or securities of any company mentioned on Streetwise
Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers,
employees or members of their families, as well as persons interviewed for
articles and interviews on the site, may have a long or short position in
securities mentioned. Directors, officers, employees or members of their
immediate families are prohibited from making purchases and/or sales of those
securities in the open market or otherwise from the time of the interview or
the decision to write an article until three business days after the
publication of the interview or article. The foregoing prohibition does not
apply to articles that in substance only restate previously published company
releases.
Disclosures from Raymond James, Martin Midstream Partners L.P., June
10, 2019
ANALYST INFORMATION
Analyst Holdings and Compensation: Equity analysts and their staffs at
Raymond James are compensated based on a salary and bonus system. Several
factors enter into the bonus determination including quality and performance
of research product, the analyst's success in rating stocks versus an
industry index, and support effectiveness to trading and the retail and
institutional sales forces. Other factors may include but are not limited to:
overall ratings from internal (other than investment banking) or external
parties and the general productivity and revenue generated in covered stocks.
The analyst Justin Jenkins and J.R. Weston, primarily responsible for
the preparation of this research report, attest to the following: (1) that
the views and opinions rendered in this research report reflect his or her
personal views about the subject companies or issuers and that no part of the
research analyst's compensation was, is, or will be directly or indirectly
related to the specific recommendations or views in this research report. In
addition, said analyst(s) has not received compensation from any subject
company in the last 12 months.
RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek
compensation for investment banking services from all companies under
research coverage within the next three months.
Limited Partnerships may generate unrelated business taxable income (UBTI),
which can create a tax liability that must be paid from a retirement account.
To the extent that Raymond James is your IRA custodian, and there is
potential tax liability for UBTI generated by the fund, Raymond James will
take the necessary steps to pay the tax from the retirement account by
working with a third party to compute the tax liability and prepare the IRS
form 990-T for submission to the IRS.
Raymond James & Associates, Inc. makes a market in the shares of Martin
Midstream Partners L.P.
Additional Risk and Disclosure information, as well as more information
on the Raymond James rating system and suitability categories, is available here.