NEW YORK -- Energy Transfer Partners ' stock looks undervalued given its access to capital and prospects to increase profit margins, a Morgan Keegan analyst said Wednesday.
Analyst John Edwards upgraded the Dallas natural gas company to "Outperform" from "Market Perform," citing its market value relative to other prominent energy companies. Also, the company's natural gas processing business should be more profitable, he said.
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The company will be under pressure to issue more shares to help pay for a $5.7 billion acquisition of( SUG - news - people ) and $3.8 billion in planned capital spending from 2009 to 2011. That could dilute shareholders' investment. Still, Edwards said he expects the company will continue to increase distributions to its shareholders next year.
Edwards dropped his price target for the company to $47.75 from $49 per share to take into account the issuing of new shares. The stock closed at $41.22 on Tuesday.
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