SUN - Sunoco cut to Neutral but with Street-high $49 PT at Citi

Sunoco LP (SUN +0.1%) is little changed after Citi downgraded units to Neutral from Buy, less than two months after upgrading the stock, while raising its price target to a Street-high $49 from $44 on relative valuation. Sunoco units have outperformed a "basket of peers" by ~18% since mid-December, so Citi analyst George Wang sees more muted upside - a ~12% total return - even under more his aggressive EBITDA forecast of $840M from $810M on expected higher sales volumes. "While all of this sounds quite bullish and not much like a downgrade to Neutral at all, we believe the current unit price of ~$47 is pricing a lot of this in already," Wang writes. Sunoco's exceptionally high 7%-plus distribution yield is "safe for the foreseeable future," Aristofanis Papadatos writes in a bullish analysis posted recently on Seeking Alpha.

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Sunoco cut to Neutral but with Street-high $49 PT at Citi