Wolfe Research has issued a report downgrading the rating for midstream energy company Enterprise Products Partners LP (EPD.US) from "Peer Perform" to "Underperform," while setting a price target of $31. Wolfe pointed out that despite the company's very weak performance in 2025, its stock price has delivered a standout performance; this wave of "exceptional trading" has directly led to its current valuation being significantly higher than that of its peers. Analyst Keith Stanley believes that Enterprise Products no longer has the justification to command a valuation premium above its midstream energy master limited partnership (MLP) peers. The reasons are that the company's performance in 2025 confirms its business defensiveness is not particularly strong; its current balance sheet condition is converging with most peers, significantly eroding its previous competitive advantages; and its core growth business in Permian Basin natural gas liquids is facing intense market competition, with industry overcapacity risks increasingly intensifying. Stanley also expressed cautious optimism regarding an eventual recovery in the oil market in 2026 and the easing of natural gas transportation bottlenecks in the Permian Basin—trends that would benefit stocks focused on the Permian Basin. However, he emphasized that following the significant stock price surge in 2025, Enterprise Products' potential for further price appreciation is far less than that of its peer stocks. Furthermore, considering the company's management has consistently adhered to a conservative capital allocation strategy, the long-awaited plan to increase the scale of share buybacks this year might ultimately disappoint investors.
Comments