UPDATE: J.P. Morgan Initiates Coverage on Calumet Specialty Products Partners LP with Neutral Rating, $32 PT on Mixed Factors

In a report published Thursday, J.P. Morgan analyst Jeremy Tonet initiated coverage on

with a Neutral rating and $32.00 price target. In the report, J.P. Morgan noted, “We are initiating coverage of CLMT with a Neutral rating and $32 YE14 price target. CLMT is a specialty and fuel products refiner that produces a diverse product base of more than 3,500 individual specialty products with relatively high switching costs. The partnership also maintains a dispersed customer portfolio, which has 4,900 active customers with no customer representing more than 10% of sales. We believe the specialized, geographically diversified nature of CLMT's refining business, high switching costs, and relatively higher customer stickiness give CLMT's cash flows more predictability and less volatility than traditional fuel refineries. However, lower fuel product margins on account of lower crack spreads and escalated RIN costs, a relatively heavy turnaround year, as well as some pressure in the Specialty Products business, will likely drive soft 2013 results and coverage below 1.0x. We believe this transient noise will prevent the CLMT unit price from reflecting an attractive organic growth portfolio and favorable structural trends during the near term.” Calumet Specialty Products Partners LP closed on Wednesday at $30.02.