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.
Showing posts with label Capex. Show all posts
Showing posts with label Capex. Show all posts
Tuesday, November 2, 2010
Tuesday, October 12, 2010
Mechel OAO (NYSE:MTL) Downgraded by Deutsche (NYSE:DB)
Deutsche Bank (NYSE:DB) downgraded Mechel OAO (NYSE:MTL), citing valuation and earnings. They downgraded the Russian miner from "Buy" to "Hold."
"Mechel remains our preferred growth story in the Russian metals and mining space; hence, we assume a terminal growth rate of 5% in our DCF model. We are concerned, though, about the company’s deteriorating cash flows due to the rising asset intensity of the business. This, coupled with an excessive debt position and high near-term capex requirements, pushes financial risks to the upside. The stock reaching a valuation of 6.1x 2011E EV/EBITDA has prompted us to downgrade it to Hold, with a new 12-month target price of USD26.1/ADS (vs USD27.1/ADS previously). The launch of the Elgaugol deposit is likely to attract plenty of interest in the stock; however, additional coal volumes are unlikely to improve the near-term earnings outlook, in our view," said Deutsche.
Mechel closed Monday at $25.04, gaining $0.12, or 0.48 percent.
"Mechel remains our preferred growth story in the Russian metals and mining space; hence, we assume a terminal growth rate of 5% in our DCF model. We are concerned, though, about the company’s deteriorating cash flows due to the rising asset intensity of the business. This, coupled with an excessive debt position and high near-term capex requirements, pushes financial risks to the upside. The stock reaching a valuation of 6.1x 2011E EV/EBITDA has prompted us to downgrade it to Hold, with a new 12-month target price of USD26.1/ADS (vs USD27.1/ADS previously). The launch of the Elgaugol deposit is likely to attract plenty of interest in the stock; however, additional coal volumes are unlikely to improve the near-term earnings outlook, in our view," said Deutsche.
Mechel closed Monday at $25.04, gaining $0.12, or 0.48 percent.
Tuesday, October 5, 2010
BP (NYSE:BP) Lowering Capex to Help Fund Gulf Cleanup
BP (NYSE:BP) has made a couple of move recently to cleanup the Gulf and its reputation.
The most recent announcement is they're going to reduce capital expenditures by 10 percent in order to release funds to pay for the Gulf cleanup.
Recently they also said they're going to lower the number of operatorships it holds in the Gulf, raising more capital by selling portions to other operators.
New BP CEO Bob Dudley also said there shouldn't be a problem reinstating the dividend for BP sometime in the near future, although he balanced that by saying it's the board of directors' decision and not his as to when that would happen.
Slowly a sense of normalcy is returning to the company, and that could be a good thing for their market cap, which would help them going forward as the value of the company rises.
The most recent announcement is they're going to reduce capital expenditures by 10 percent in order to release funds to pay for the Gulf cleanup.
Recently they also said they're going to lower the number of operatorships it holds in the Gulf, raising more capital by selling portions to other operators.
New BP CEO Bob Dudley also said there shouldn't be a problem reinstating the dividend for BP sometime in the near future, although he balanced that by saying it's the board of directors' decision and not his as to when that would happen.
Slowly a sense of normalcy is returning to the company, and that could be a good thing for their market cap, which would help them going forward as the value of the company rises.
Wednesday, September 1, 2010
Rex (Nasdaq:REXX) Selling Some Marcellus Assets to Sumitomo
Rex Energy Corp (Nasdaq:REXX) announced it is selling some of its acreage in the Marcellus shale to Sumitomo Corp. of Japan.
Shares of the energy company soared on the news, finishing Tuesday's trading session at $11.31, gaining $1.05, or 10.23 percent.
Terms of the deal are $140.4 million, with $88.4 million in cash at the close of the deal, and another $52 million in the form of a drilling carry.
The assets sold include 12,900 acres in the Marcellus Shale in Pennsylvania, a number of shale wells already in production, and other mid-stream assets.
Concerns have also been allayed over the shortfall of its capital expenditures, which now stands at $130.7 million.
Shares of the energy company soared on the news, finishing Tuesday's trading session at $11.31, gaining $1.05, or 10.23 percent.
Terms of the deal are $140.4 million, with $88.4 million in cash at the close of the deal, and another $52 million in the form of a drilling carry.
The assets sold include 12,900 acres in the Marcellus Shale in Pennsylvania, a number of shale wells already in production, and other mid-stream assets.
Concerns have also been allayed over the shortfall of its capital expenditures, which now stands at $130.7 million.
Wednesday, June 2, 2010
Goldman Sachs (NYSE:GS) Upgrades Joy Global (Nasdaq:JOYG), Surges 8 Percent
The upgrade of Joy Global (Nasdaq:JOYG) by Goldman Sachs (NYSE:GS) pushed the mining-equipment manufacturer up over 8 percent on the day, up to $52.50, a gain of $4.24 or 8.77% as of 4:04PM EDT.
What was important about this wasn't the upgrade, which will always give a quick boost to a company, but the reason behind the upgrade, which in the case of Goldman Sachs for Joy Global, makes a lot of sense.
The reasoning relates to capex or capital expenditures the mining industry around the world has committed to spending on new equipment this year.
Goldman estimates it'll rise as high as 30 percent in 2010.
As with most others watching the markets and economics, concerns over China and the sovereign debt of the European Union could easily dampen those estimates, which a lot of analysts in other sectors have chosen to ignore or consider irrelevant.
But until the numbers come in, it isn't a surety as to how deeply these latest challenges will effect any industry, including those manufacturing mining equipment like Joy Global does.
What was important about this wasn't the upgrade, which will always give a quick boost to a company, but the reason behind the upgrade, which in the case of Goldman Sachs for Joy Global, makes a lot of sense.
The reasoning relates to capex or capital expenditures the mining industry around the world has committed to spending on new equipment this year.
Goldman estimates it'll rise as high as 30 percent in 2010.
As with most others watching the markets and economics, concerns over China and the sovereign debt of the European Union could easily dampen those estimates, which a lot of analysts in other sectors have chosen to ignore or consider irrelevant.
But until the numbers come in, it isn't a surety as to how deeply these latest challenges will effect any industry, including those manufacturing mining equipment like Joy Global does.
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