Bank of America Merrill Lynch Neutral On Genesis Energy, L.P.

Bank of America Merrill Lynch has a Neutral rating and a $28 price target on shares of Genesis Energy, L.P. GEL. In a note to clients, Bank of America Merril Lynch writes, "We continue to believe GEL's unit price reflects a balanced risk/reward profile. GEL completed a relatively expensive general partner (GP) buyback deal and we continue to expect the transaction to prove dilutive to 2011E distributable cash flow (DCF) (see: Downgrading to Neutral; maintain $27 PO). However, we note GEL's GP buyback should prove to be beneficial over the long-term as the elimination of GP incentive distribution rights (IDRs) should lower GEL's cost of equity capital. We note GEL's target yield is currently higher than our average target yield for more fee-based, pipeline and storage MLPs, which we see as fair given moderate (but improved) organic growth outlook, uncertainty at GEL's CHOPS stake and tighter distribution coverage ratios. We maintain our annual cash distribution growth rate estimates of 8/7/5% in 2011/12/13E, respectively." Shares of GEL lost 16 cents yesterday to close a $27.33, a loss of 0.58%.