Analyst Gives A Thumbs Up To Magellan Midstream Partners-ONEOK Merger, Calls It Positive

RBC Capital Markets analyst Elvira Scotto increased the price target of Magellan Midstream Partners LP MMP to $66 from $59 and downgraded to Sector Perform from Outperform.
The analyst sees the proposed acquisition of MMP by ONEOK Inc OKE as positive but downgraded the stock as it was trading close to the deal price.
This week, Magellan and ONEOK executed a definitive merger agreement in which ONEOK will acquire all outstanding units of Magellan in a cash-and-stock transaction valued at approximately $18.8 billion.
The agreement includes $25 in cash and 0.6670 shares of ONEOK common stock for each outstanding Magellan common unit.
Scotto updated the company's estimates following Q1 2023 results reported earlier this month.
MMP Q1 revenues of $869.7 million topped the consensus of $723.5 million, and Adjusted EPS of $1.32 exceeded the consensus of $1.19.
The analyst now expects adjusted EBITDA of $1.53 billion (vs. $1.50 billion earlier) in 2023 and $1.56 billion in 2024.
Scotto introduced a 2025 adjusted EBITDA estimate of $1.60 billion.
Price Action: MMP shares are trading higher by 0.77% at $61.85 on the last check Wednesday.

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