Buckeye Partners Has a Consensus “Hold” Rating from Analysts
An In-Depth Analysis of Buckeye Partners’ Recent Performance
BPL’s 2016 guidance
Buckeye Partners (BPL) has not provided any financial or capex guidance for 2016. The partnership gave a rough estimate of $300 million–$400 million for its 2016 capex.
Negative credit rating outlook
On an analyst question regarding BPL’s credit rating, Keith St. Clair, BPL’s CFO, replied in the 3Q15 earnings call, “We are at Baa3 and BBB-minus for all three of the agencies. We do have a negative outlook at S&P. Their annual review timeline for Buckeye is in the first quarter, so—and we are able to demonstrate that we have the majority of the first phase of expansion in south Texas in service and generating revenues. Given that those cash flows are contracted, my expectation is that when S&P completes their review that we would see that negative outlook removed.”
Rising leverage is a major concern for midstream companies in the current low price environment. Recently, Williams Partners (WPZ) and its sponsor Williams Companies (WMB) were downgraded by the rating agencies due to their high financial leverage. For more details, please read Why Moody’s Downgraded Williams Partners and Williams Companies.
Analysts’ targets for BPL
At a broader level, ~63.4% of the analysts rated Buckeye Partners a “hold” and the remaining ~36.4% rated it a “buy.” The median target price of $79 for BPL implies a ~41.9% price return in the next 12 months from its January 13, 2016, closing price of $55.70.
BPL’s peers Sunoco Logistics (SXL), NuStar Energy (NS), and Genesis Energy (GEL) have “buy” ratings from 73.3%, 63.6%, and 63.6% of analysts, respectively. BPL constitutes 5.72% of the Global X MLP ETF (MLPA) and 0.59% of the Multi-Asset Diversified Income Index ETF (MDIV).
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