kodda/iStock via Getty Images
NGL Energy Partners (NYSE:NGL) +1.4% in Monday’s trading as Wells Fargo upgraded the stock to Equal Weight from Underweight with a $4 price target, lifted from $2, reflecting significant progress on repairing its balance sheet, aided by asset sales at attractive multiples.
Wells Fargo’s Ned Baramov said the units fairly reflect the long-term growth prospects of NGL’s (NGL) water operations in the Delaware Permian, offset by uncertainty in contributions from Crude oil and Liquids Logistics.
Baramov said his analysis is based on is based on a blend of Wells Fargo’s three-stage distribution discount model, which assumes an 13% required rate of return, and a long-term decline rate of 2%; a three-stage discounted free cash flow analysis using a discount rate of 10.5% and a long-term decline rate of 2%; and a sum-of-the-parts valuation based on its FY 2024 forecast, which the bank raised to $645M to reflect higher water contributions in-line with guidance.
More on NGL Energy Partners:
Source: seekingalpha.com
