CONE Midstream (CNNX) Up To Strong Buy On Solid Results

On Aug 30, 2016, Zacks Investment Research upgraded CONE Midstream Partners LP (NYSE:CNNX) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

CONE Midstream Partners has been witnessing rising earnings estimates on the back of strong performances over the last few quarters. This oil & gas pipeline operator delivered positive earnings surprises in each of the last four quarters, with an average beat of 19.38%. The long-term expected earnings growth rate for this stock is 9.7%.

The partnership is also gaining from its cost control and operating efficiencies, which is boosting its margins. A solid financial position enabled management to raise its quarterly cash distribution to 25.4 cents per unit reflecting 15.5% year-over-year growth.

CONE Midstream Partners has a long-term fixed-fee gathering agreement with its sponsors, CONSOL Energy (NYSE:CNX) and Noble Energy (NYSE:NBL) . CONE Midstream Partners’ sponsors have a strong position in the resource-rich Marcellus Shale and Utica Shale, which assures strong volumes for the partnership.

Thanks to its solid performance over the last few quarters, the partnership’s management raised its 2016 adjusted EBITDA guidance to the range of $96–$106 million, up from the earlier expected range of $93–$103 million. Full-year distributable cash flow attributable to the partnership is now expected to be in the range of $82–$92 million, up from the previous projection of $79–$89 million.

The Zacks Consensus Estimate for 2016 increased 5.6% to $1.51 as 50% of the estimates were revised higher over the last 60 days. We see a similar trend for 2017 as well, with 50% estimates going up over the same time frame, lifting the Zacks Consensus Estimate by 8.4% to $1.55.

Another Stock to Consider

Investors interested in the Oil and gas pipeline industry may also consider Enbridge Energy Partners, L.P. (NYSE:EEP) , which sports a Zacks Rank #1.

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