On Thursday, Wells Fargo (NYSE:WFC) maintained an Overweight rating on Enterprise Products Partners (NYSE: NYSE:EPD) and increased the share price target to $33 from $32. This adjustment reflects a marginally higher distribution growth rate anticipated by the firm. The decision follows an investor update call, which served as a substitute for an in-person investor day and provided limited new information.
Enterprise Products Partners' overall macroeconomic outlook has remained steady, with the company aiming for a total shareholder return (TSR) of 10-13%. In light of this, Wells Fargo has revised its EBITDA forecasts for 2024 and 2025 upwards to $9,696 million and $10,186 million, respectively, from the previous estimates of $9,655 million and $10,136 million.
The upward revision in the price target and earnings estimates by Wells Fargo also factors in the company's recent acquisitions. Enterprise Products Partners has acquired interests in various energy assets, including a 20% stake in the Midland-to-ECHO 1 pipeline, 25% in Mont Belvieu Frac 1 and 2, and 15% in the Panola Pipeline.
These acquisitions, combined with a slightly higher projection for export volumes, have led to increased free cash flow (FCF) per share estimates for 2024 and 2025, now at $1.95 and $2.46, respectively, up from $1.88 and $2.39.
Additionally, the company plans to address operational issues at its PDH 2 facility in the second half of 2024. The plant is expected to undergo maintenance for approximately one month to resolve problems, including heater tube failure and the replacement of 4th reactor screens, which have constrained production to 80% of its design capacity. Post-maintenance, the performance of both PDH 1 and PDH 2 facilities in 2024 is projected to surpass that of 2023.
InvestingPro Insights
Following Wells Fargo's positive outlook on Enterprise Products Partners, InvestingPro data further complements the picture of the company's financial health. With a substantial market capitalization of $64.79 billion and a P/E ratio of 11.8, EPD presents itself as a company with an attractive valuation in the market. Moreover, the company's commitment to rewarding shareholders is evident with a high dividend yield of 6.89%, and it has impressively maintained dividend payments for 27 consecutive years.
InvestingPro Tips indicate that analysts have recently revised their earnings upwards for EPD, suggesting a potential upside in performance. Additionally, EPD is a prominent player in the Oil, Gas & Consumable Fuels industry, which aligns with its strategic acquisitions aimed at enhancing its asset portfolio and boosting export volumes. Investors may also find reassurance in the company's low price volatility and consistent profitability over the last twelve months. For those looking to delve deeper into EPD's investment potential, InvestingPro offers additional tips, and by using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
To explore further insights and tips on Enterprise Products Partners, including the 11 additional InvestingPro Tips not covered here, visit: https://www.investing.com/pro/EPD
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