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Why Energy Transfer Units Rose 12% in April

By Reuben Gregg Brewer - May 5, 2021 at 12:34PM

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Units of the midstream partnership got a boost from Wall Street and some good news on the acquisition front.

What happened

Units of Energy Transfer (ET 1.60%), a master limited partnership focused on the midstream sector of the energy market, rose about 12% in April according to data from S&P Global Market Intelligence. There was some company news, but also some Wall Street news that helped things along.

So what

On the company level, Energy Transfer got word back from the SEC that its acquisition of Enable Midstream (ENBL) could move forward. Since just two companies own 79% of Enable, the acquisition is basically a done deal at this point. That's a positive, given that the purchase is expected to be one of several catalysts that could spark a business recovery for Energy Transfer.  

An energy pipeline with a man welding.

Image source: Getty Images.

Meanwhile, two separate Wall Street analysts offered upbeat views on the partnership toward the end of April. Evercore ISI took Energy Transfer from inline to outperform on April 22. And Mizuho initiated coverage of the name on April 28 with a buy rating. Investors tend to look at such analyst musings very positively, so it's not surprising that Energy Transfer saw a nice rally to end the month.  

Now what

The energy sector is starting to see some recovery after a very difficult year in 2020. That said, there are still big headwinds for pipeline companies, most notably because of the current low-carbon zeitgeist. In fact, Energy Transfer is specifically facing pushback with regard to its Dakota Access pipeline that may lead it to the Supreme Court. In other words, this is a partnership that may not be a good option for the risk averse despite the good monthly showing in April. 

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Energy Transfer LP Stock Quote
Energy Transfer LP
$11.77 (1.60%) $0.18
Enable Midstream Partners, LP Stock Quote
Enable Midstream Partners, LP

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