Our Underperform recommendation on Energy Transfer Partners (ETP) units takes into account the bearish outlook for pipeline operators. While the partnership’s liquidity position is sound, we continue to believe that the near- to medium-term outlook for its natural gas gathering and processing business remains weak.
Weighed down by these factors, Energy Transfer posted a third-quarter 2009 loss. The partnership’s low growth and seasonal propane business also remain a major liability, in our view.
Given these headwinds, we expect Energy Transfer units to be under pressure in the medium- to long-term. The partnership’s discounted valuation relative to the pipeline MLP group reflects its heightened risk profile.Zacks Investment Research
