UPDATE: Oppenheimer Assumes QR Energy at Perform Despite Solid Current Yield

In a report published Thursday, Oppenheimer analyst Bernard Colson downgraded QR Energy (NYSE: QRE) from Outperform to Perform, and removed the $23.00 price target.

In the report, Oppenheimer noted, “We assume coverage of QRE with a Perform rating (previous rating was Outperform) and remove the previous $23 price target. We believe QRE's current distribution is sustainable, and the current yield exceeds the peer average of 10%. However, it is difficult to envision meaningful distribution growth given tight distribution coverage and the impending dilution from the company's outstanding convertible preferred units (held by QRE's sponsor). Therefore, total returns (excluding applicable costs) may be limited to the current yield. So while QRE may be a decent choice for those wishing to maximize current yield, it does not warrant an Outperform rating, in our view. All of our ratings are assigned with total return in mind.”

QR Energy closed on Wednesday at $16.59.