Credit Suisse Gets More Selective on MLPs, High Payouts Await (TRGP, GEL, ACMP, PAA, EPB, KMI, TTLP, EQM, CVRR, AMJ, KYN)

About a month ago, analysts at Credit Suisse AG (NYSE: CS) touted several master limited partnerships (MLPs) with Overweight ratings and raised price targets. The companies in that list included Targa Resources Corp. (NYSE: TRGP), Genesis Energy L.P. (NYSE: GEL), Access Midstream Partners L.P. (NYSE: ACMP) and Plains All American Pipeline L.P. (NYSE: PAA). Today, the Credit Suisse analysts looked at the other side of the coin. The payouts remain solid, but some are not as lofty as they have been.

El Paso Pipeline Partners L.P. (NYSE: EPB) was downgraded from Outperform to Neutral based on valuation. The analysts see decelerating distribution growth as the company absorbs the drop-downs associated with the acquisition of El Paso Corp. by Kinder Morgan Inc. (NYSE: KMI). The price target was raised by $1.00 to $44.00, and the total return was forecast at 9% to 13%.

Tesoro Logistics L.P. (NYSE: TLLP) was downgraded from Outperform to Neutral because the analysts believe the company is fairly valued. The target price on the common units was raised from $49 to $53. Credit Suisse sees a compound annual growth rate of 17.3% over the next five years.

EQT Midstream Partners L.P. (NYSE: EQM) also was downgraded from Outperform to Neutral on a valuation basis. The unit price has increased 25% so far in 2013, which Credit Suisse considers to be the company’s fair value. The target price was raised from $39 to $41 on a total return potential of 7% to 14%.

CVR Refining L.P. (NYSE: CVRR) has been upgraded from Neutral to Outperform based on a comparison with its MLP peers, and the distribution forecast was raised to $6.15 per common unit, which is near the upper end of the company’s $5.30 to $6.30 guidance. Credit Suisse raised the price target to $34.00, which the analysts believe could be conservative if the WTI-Brent spread widens.

We have noted before that the S&P 500 outperformed the Alerian MLP Index (AMZX) in 2012 and that the MLPs are making up some ground so far in 2013. Both the Alerian MLP Index ETN (NYSEMKT: AMJ) and the Kayne Anderson MLP Investment Co. (NYSE: KYN) closed-end fund are outperforming the S&P 500 by about 4% or so since the beginning of the year. But all MLPs are not created equal, as Credit Suisse pointed out today.