Why Markwest Energy Partners, L.P. Will Keep Pulling Back

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Markwest Energy Partners, L.P.  (NYSE: MWE  )  slumped about 3% this morning after Wunderlich Securities downgraded natural gas transporter from buy to hold.

So what: Along with the downgrade, analyst David Askew lowered his price target to $68 (from $78), representing about 7% worth of upside to yesterday's close. While Askew remains bullish on Markwest's long-term prospects, he thinks that elevated funding needs will continue to limit distribution growth over the next several months.

Now what: According to Wunderlich, Markwest's short-term risk/reward trade-off isn't too attractive. "[W]e believe investors are concerned over the return profile on the CapEx and the lead time required to achieving the stated mid-double-digit ROIC targets, which we believe will limit near-term valuation expansion," noted Askew. "Although MWE will likely be capable of double-digit distribution growth from 2016-2018 and potentially beyond, we believe the risk profile has increased and investor fatigue will keep units range bound in the next 6-9 months." With the stock off about 15% from its 52-week highs and currently boasting a 5%-plus dividend yield, however, those short-term concerns might be providing patient Fools with a juicy long-term income opportunity.

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