NGL - NGL Energy Partners upgraded at Wells Fargo on balance sheet repair

2023-06-05 12:54:46 ET

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:

• Financial and valuation comparison to sector peers
• Analysis: NGL Energy Partners Stock Is Still Cheap After Doubling
• Stock price return: Up 213% YTD, up 69% in the past 12 months

For further details see: