UBS Raises Price Target on Holly Energy Partners, L.P. (HEP) Following Analyst Day

UBS reiterated a Neutral rating on Holly Energy Partners (NYSE: HEP), and raised the price target to $35.00 (from $33.00), following an analyst day. HEP presented an annual distribution growth target of 8% for '15-'17.

Analyst Shneur Gershuni commented, "At the HFC/HEP Analyst Day, HEP presented an annual distribution growth target of 8% for '15-'17, above our 5%-6% estimate. Distribution growth will be driven by $400-$450mm in investment spending which is expected to add ~$91mm in incremental EBITDA by 2017. HEP agreed to purchase for ~$62mm the recently completed naphtha fractionation & the hydrogen generation unit constructed at HFC’s El Dorado refinery. The drop is expected to close in 4Q15. Both units are expected to be backed by 15-year tolling agreements with minimum quarterly throughput commitments from HFC. HEP expects the transaction to be immediately accretive and add $6.9mm to '16 EBITDA. HEP also announced it acquired a 50% interest in the Frontier Pipeline from Enbridge. The 296 mile pipeline has 72,000 bpd capacity and supplies Salt Lake City refiners with Canadian and Rocky Mountain crude (PAA increased its ownership to 50% and will remain the operator). The deal is expected to add $6-$7mm in EBITDA annually. Management also presented opportunities for further drops and cost savings."

For an analyst ratings summary and ratings history on Holly Energy Partners click here. For more ratings news on Holly Energy Partners click here.

Shares of Holly Energy Partners closed at $33.73 yesterday.

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