ONEOK Partners L.P. (NYSE: OKS) is one of the higher yielding master limited partnerships (MLPs), with a distribution rate of roughly 7%. This is of course a yield-equivalent, because MLPs generally pay out income and a more tax-efficient return of capital that makes these distributions rather than pure dividends. Still, with oil prices having been pounded from over $100 to under $65, the sentiment on oil and gas assets has politely been worse than just negative. ONEOK Partners has seen its units peak at almost $60 just at the end of last summer, only to fall to the low $40s.

Now we have more indications from the company that its long-term distribution targets remain in place. The firm’s capex guidance may seem high in its analyst day presentation, but 2015 guidance on the distribution, discounted cash flow and EBITDA seem fine. ONEOK Partners has effectively maintained that it expects its distribution growth to be 6% to 8% from 2014 to 2017.

In response to the analyst day views, Credit Suisse’s John Edwards maintained the firm’s Outperform rating on ONEOK Partners and also has a $61 price target. That is after a 6% gain to $43.96 on Tuesday and after the MLP units almost went as low as $41 before bouncing. The initial news reaction had ONEOK units up another 3% at $45.30 in early Wednesday trading.

ALSO READ: Why MLP Sale Signals Better Energy Market Than Price Indicates

This 7% or so yield-equivalent distribution is far from the highest distributions of MLPs, but this MLP is one of the larger entities, with a market cap that has recovered to nearly $11.5 billion.

Credit Suisse’s John Edwards said:

2015 Segment Operating Income, EBITDA and DCF In-Line, but 2015 Cap Ex Budget is significantly above our estimate: ONEOK’s EBITDA guidance of $1.88 billion is in line with our $1.892 billion 2015 EBITDA estimate and above consensus of $1.777 billion. Discounted Cash Flow guidance of $1.31 to $1.49 billion (of which midpoint is a bit below our $1.48 billion estimate) owing to higher maintenance capex. Segment operating income guidance of $1.32 billion to $1.48 billion is in line with our $1.41 billion estimate. Natural gas gathering and processing ($309-$409G vs. $422E) was offset by natural gas pipelines ($150-$160G vs. $146E) and Natural gas liquids ($867-$917G vs. $843E). The main surprise was capex guidance of $2.6 billion to $3.0 billion, well ahead of our $2.2 billion capex forecast.

Still, Edwards said in the note that he expects the investor reaction to be relatively neutral. The reaction we have seen ahead of and from the analyst day has been far from neutral. That being said, stay tuned to see if things can remain steady and stable. With the negative reactions in MLPs and in the oil and gas sector, it might be more than surprising if there was a snapback rally from a sector that is typically not so volatile.

Trading at $45.30, the ONEOK Partners units have a 52-week range of $41.07 to $59.67. Thomson Reuters shows that the consensus analyst price target is $58.33, and the highest analyst price target is up at $65, versus the $61 call from Credit Suisse.

ALSO READ: Analyst Picks Top MLPs Insulated From Low Oil Prices

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.