Barclays Cuts Estimates for Enbridge Energy Partners; Says Financing, Cash Flow Issues Persist (EEP)

Oil pipeline operator Enbridge Energy Partners, L.P. (EEP) on Thursday caught some tepid commentary from analysts at Barclays Capital.

The firm maintained its “Equalweight” rating and $33 price target on EEP, which suggests a 9% upside to the stock’s Tuesday closing price of $30.14.

A Barclays analyst commented, “EEP’s preannouncement does provide clarity, but distribution coverage will likely fall below 0.9x in 2012. While we view EEP’s $3B portfolio of largely fee-based crude oil and NGL pipeline projects as favorable long term, tempering our near-term view are large financing needs, lag in cash flows from projects, and low coverage in 2012.”

Accordingly, the analyst lowered its 2012 earnings estimate from $1.25 to $1.01 per share, and 2012 estimate from $1.66 to $1.52 per share.

Continuing, “We are decreasing our 2012 EBITDA estimate from $1.23 to $1.14B and expect the Street to lower estimates with consensus currently at $1.24B…We are modestly decreasing our 2012/13-year distribution CAGR estimates from 2.3%/2.9% to 1.8%/2.7%.”

Enbridge Energy Partners shares were mostly flat in morning trading Thursday.

The Bottom Line
Enbridge Energy Partners currently offers a 7.07% dividend yield, based on Tuesday’s closing price of $30.14 per share and the company’s annualized dividend payout of $2.13 per share.

Enbridge Energy Partners, L.P. (EEP) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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