UPDATE: Bank of America Downgrades Oiltanking Partners LP to Underperform on Valuation

In a report published Wednesday, Bank of America analyst Gabe Moreen downgraded the rating on Oiltanking Partners LP OILT from Neutral to Underperform, but raised the price target from $38.00 to $46.00. In the report, Bank of America noted, “With a current yield of 3.2% (versus the Alerian MLP Index (AMZ) yield of 5.7%) and YTD outperformance versus the rest of the sector, we see OILT's growth potential and positive attributes as more than priced in by the market. OILT has returned 32.3% YTD versus the AMZ which on a total return basis has returned 21.9%. Despite OILT's high quality, fee-based asset base with attractive growth opportunities (estimated 15% annual cash distribution CAGR), under-levered balance sheet (2x debt/EBITDA), strong and supportive parent, and relatively small size which could make acquisitions meaningful, we do not believe units justify the current premium valuation assigned by the market.” Oiltanking Partners LP closed on Tuesday at $50.10.