We are downgrading NuStar (NS) units to Underperform from Neutral, reflecting the challenging business environment for pipeline operators. While the partnership’s liquidity position is sound, we continue to believe that the near- to medium-term outlook for petroleum products expenditure remains weak.

Another concern for NuStar is the weak demand for refined products that translates into lower pipeline throughputs. Furthermore, the addition of the asphalt business has increased the partnership s exposure to volatility in commodity prices.

Given these headwinds, we expect NuStar units to be under pressure in the near future. Our $56 price objective reflects a target yield of 7.85%, with a distribution run rate of $4.43 per unit (a 4% increase from the current level).

Zacks Investment Research

1. (NS) NuStar Energy L.P. Analyst Downgrades to UnderperformWe are downgrading NuStar Energy L.P. (NS) units to Underperform from Neutral, reflecting the challenging...
2. (NS) NuStar Energy L.P. Reports Profit GrowthNuStar Energy L.P. (NS), a master limited partnership (MLP), announced better-than-expected fourth quarter results on...
3. (ETP) Energy Transfer Partners – Bear of the DayOur Underperform recommendation on Energy Transfer Partners (ETP) units takes into account the bearish outlook...
4. (NS) NuStar Energy Closes Public OfferingNuStar Energy L.P. (NS) announced the closing of its 5,750,000 common units of public offering,...
5. (NS) NuStar Energy Beats Expectations – Raises DistributionNuStar Energy L.P. (NS), a master limited partnership (MLP), announced better-than-expected third quarter results on...
6. (VLO) Valero Energy- Bear of the DayWe reiterate our Underperform rating for Valero Energy (VLO) shares as a combination of weak...

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