Noble Midstream Partners Shares Initiated Overweight By Barclays

Shares of Noble Midstream Partners LP (NYSE: NBLX) are currently trading at a discount to the sponsored G&P MLPs peer group, despite offering better growth prospects, Barclays’ Heejung Ryoo said in a report. She initiated coverage of the company with an Overweight rating and a price target of $35.

Noble Midstream Partners is a “high-growth, relatively stable” MLP that is backed by a leading oil and gas producer parent, Noble Energy, Inc. (NYSE: NBL), analyst Ryoo mentioned.

Bright Growth Prospects

Noble Midstream Partners has bright growth prospects, and is expected to generate a distribution CAGR of 20 percent through 2019. The prospects are backed by anticipated base volume growth, organic projects, drop down opportunity in excess of $1 billion and a strong balance sheet, Ryoo noted.

The company’s long-term distribution growth prospects were also supported by “inflation escalators, contribution from third-party revenues and strategically located assets.”

“Stability is provided by 15-year, fee-based, inflation-adjusted contracts with 340,000 acres under dedication in the DJ and Permian Basins,” the analyst added.

Valuation

Noble Midstream Partners has a yield of 5.4 percent, higher than that the 4.6 percent yielded by sponsored high-growth G&P MLP peers. Ryoo believes that Noble Midstream Partners’ shares deserve to trade at a premium due to the company’s “high growth visibility and cash flow stability.”

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