Bullish options flow was detected in MMP stock on December 31, 2019, after recent media reports indicate that Magellan Midstream Partners is shopping three of its marine terminal complexes.
Mizuho analyst Gabriel Moreen noted that recent media reports indicate that Magellan Midstream Partners is shopping three of its marine terminal complexes and the analyst thinks a terminals sale could make strategic sense by concentrating its marine terminals presence in the Texas Gulf Coast. Proceeds from the sale of some marine terminals could generate about $600M, which could fund a special distribution, said Moreen, who added that it is unclear if using the proceeds for stock buybacks would be well received given the stock’s current valuation. Even without a sale of non-core marine terminals, comments at a competitor conference earlier this month show that management is “sounding the right notes on cash return as capital investment decelerates” and strongly considering additional capital return options, Moreen tells investors. The analyst keeps a Neutral rating and $68 price target on Magellan Midstream shares.
On November 24, 2019, Goldman Sachs analyst Michael Lapides initiated coverage of Magellan Midstream (MMP) with a Buy rating and $69 price target. The analyst believes Magellan Midstream deserves to trade at a premium valuation due to its lower risk business model and best in class balance sheet, and noted that the company “trades now slightly below its historical trend on an absolute and relative basis.” Lapides added that incremental projects not in his forecast “could enhance long-term EBITDA growth but delay free cash flow generation near-term.”