In a report published Monday, Goldman Sachs analyst Steve Sherowski initiated coverage on Plains GP Holdings LP PAGP with a Conviction List-Buy rating and $30.00 price target.
In the report, Goldman Sachs noted, “We initiate coverage of Plains GP Holdings (PAGP) with a CL-Buy rating and a $30 price target driven by our equally weighted dividend discount/relative value analysis. Our price target assumes PAGP trades at a 2.7% yield on 2014 cash flows (vs. 3.6% currently). PAGP is a levered investment in PAA – which we believe is the best positioned crude oil midstream MLP, with exposure to all of the ‘Big Three' crude oil shale basins. We forecast a robust project backlog at PAA to generate an 8%, 5-year distribution CAGR driving +20% cash flow growth at PAGP through its IDR ownership of PAA. PAGP is structured as a C-Corp but shares similar tax advantages as MLPs (it is unlikely to pay cash taxes for the foreseeable future).”
Plains GP Holdings LP closed on Friday at $22.89.
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