What to Expect from NuStar Energy’s 4Q15 Earnings Release

(Continued from Prior Part)

Analyst ratings for NuStar Energy

In this part, we’ll see what Wall Street analysts recommend for NuStar Energy (NS). On a broader level, ~88.9% of analysts rate NuStar Energy a “hold.” The remaining ~11.1% rate it a “buy.”

The median broker target price of $44 for NuStar implies an ~65.9% price return in the next 12 months from its January 21, 2016, closing price of $26.5. Sunoco Logistics Partners (SXL) and Shell Midstream Partners (SHLX) have “buy” ratings from 68.8% and 60.0% of the analysts, respectively. It’s important to note that 63.6% of the analysts rate Buckeye Partners (BPL) a “hold.” NuStar forms 3.3% of the Global X MLP ETF (MLPA).

Outlook for NuStar Energy

Investors can consider the following positives and negatives before they decide to include NuStar as a long-term investment.

Positives

• Impressive distribution coverage of 1.05x

• Stable fee-based earnings linked to mostly take-or-pay contracts. ~95% of the tariffs are FERC (Federal Energy Regulatory Commission)-based. They’re adjusted annually for inflation.

• Strong storage lease utilization of 93%

• Crude export opportunities

Negatives

• Falling Eagle Ford production impacts NuStar’s crude throughput volumes

• NuStar’s fuel marketing business isn’t doing well due to falling margins in the current low price environment

• High distribution yield and leverage impact the partnership’s external financing. This is required for funding growth projects.

For more pre-earnings coverage on midstream companies, visit Market Realist’s Master Limited Partnerships page.

Browse this series on Market Realist:

• Part 1 - Analyzing NuStar Energy’s 4Q15 EBITDA Estimates

• Part 2 - Pipeline Segment Will Drive NuStar Energy’s 4Q15 Performance

• Part 3 - Will NuStar Energy Lower Its 2016 EBITDA Guidance?