PVR Partners Upgraded to Neutral - Analyst Blog
18 May 2013 - 12:00AM
Zacks
On May 16, 2013, we upgraded our
recommendation on PVR Partners L.P. (PVR) to
Neutral from Underperform. The partnership currently has a Zacks
Rank #3 (Hold).
Why the Upgrade?
There are several growth factors, including PVR Partners’ favorable
performance in first-quarter 2013, steady projects pipeline, and
operational efficiency, which led to the improvement of the
stock.
In first-quarter 2013, PVR Partners’ both top as well as bottom
line surpassed the Zacks Consensus Estimates on strong contribution
from the natural gas business, and improvement in collection of
trunkline and gathering fees.
During first-quarter, PVR Partners invested $90.1 million primarily
to expand coverage in Marcellus Shale, Panhandle and Crescent
systems. Further, setting up of new pipelines, and extension and
improvement of the existing ones will enable the partnership to
strengthen its presence in the region and serve more customers.
PVR Partners recently acquired the membership interests of Chief
Gathering. This transaction will allow the partnership to capture
significant opportunities from the productive counties in the
northeastern area of the Marcellus Shale. We believe this
transaction will subsequently help PVR Partners to become a leader
in the midstream business with significant assets in both the
Marcellus Shale and the Granite Wash.
PVR Partners is gradually converting itself from a coal royalty
business to the midstream natural gas business. We consider this
initiative as a positive move for the partnership’s forthcoming
performance. This step will help PVR Partners to diversify its
portfolio along with steady profitability.
However, we are apprehensive about PVR Partners’ over-reliance on a
limited group of customers and greater dependence on third party
service-providers for receiving and supplying natural gas and
natural gas liquids to its customers.
Other Stocks to Consider
Apart from PVR Partners, other companies from the industry such as
Atlas Energy, L.P (ATLS), EQT Midstream
Partners, LP (EQM) and Pembina Pipeline
Corporation (PBA) are currently performing well and carry
a Zacks Rank #1 (Strong Buy).
Radnor, PA-based PVR Partners owns and operates a string of natural
gas midstream pipeline systems and processing plants and is also
involved in the management of coal as well as natural gas
properties.
ATLAS ENERGY LP (ATLS): Free Stock Analysis Report
EQT MIDSTRM PTR (EQM): Free Stock Analysis Report
PEMBINA PIPELN (PBA): Free Stock Analysis Report
PVR PARTNERS LP (PVR): Free Stock Analysis Report
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