Barclays (NYSE:BCS) sees the projected growth rate of Sunoco Logistics Partners (NYSE:SXL) as being conservative, and believe guidance is lower than what the sustainable growth rate of the company will be over the long term.
" While '11 distribution growth guidance is below consensus, SXL should still post above-average growth. We believe 6% guidance in '11 is conservative, as SXL will generate incremental cash flow from $400MM of expansion capex in '10. We expect 7.5% growth in 2011 and view 6% as more of a long-term sustainable growth rate for SXL," said Barclays.
"Our $83 PT is based on a distribution run rate of $5.00 (previously $4.97) and 6% yield (previously 6.25%). Rolling forward our distribution estimate one quarter more than offsets slightly lower '11 growth rate."
SXL closed Monday at $80.04, gaining $0.05, or 0.06 percent. Barclays raised their price target on them from $80 to $83.
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