MLP Magellan Midstream Partners Makes Strong Distribution, Wunderlich Securities Raises Target Price

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Magellan Midstream Partners, L.P., a master limited partnership (MLP) formed to own energy assets, announced that its Q311 distribution would be C$0.80 per common unit, which was above the estimates of brokerage firm Wunderlich Securities.

Wunderlich subsequently revised its distribution predictions for the MLP, and increased the company's target price to C$69 per unit instead from C$64 per unit. The brokerage also reiterated its BUY rating for the MLP's common units based on its expectation of strong distribution growth.

The MLP's distribution of C$0.80 per unit (C$3.20 annualized) for Q311 represented a 7.4 percent increase over the C$0.745 per unit (C$2.98 annualized) paid during the same period last year and a gain of 1.9 percent from the C$0.785 per unit ($3.14 annualized) for Q211. Wunderlich has increased its 2011 distribution estimate to $3.17 per unit from $3.1625 per common unit and revised its 2012 estimate to $3.41 from $3.3775. The brokerage expects strong distribution growth as the increase in these payments has been a higher-than-forecast $0.015 per unit for the last two quarters. 

Magellan Midstream Partners, L.P. closed at C$62.45 on October 18 and hit a 52-week high/low of C$63.14 and C$51.00, respectively.