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Magellan Midstream Partners, L.P.'s (MMP) fourth-quarter 2007 results came in better-than-expected, driven by strong petroleum products results, partly offset by moderately weaker than expected performance from the partnership's marine terminals. Importantly, the partnership raised its quarterly distribution for the 27th consecutive quarter to the annualized run rate of $2.63 per unit, up 9.1% year over year.
The company reported earnings available to limited partners of $49.6 million or $0.74 per unit (our estimate was $0.69 per unit), compared to $42.7 million or $0.64 per unit in the year-earlier quarter. The positive year-over-year variance strong petroleum product's pipeline system results, reduced operating expenses, higher average transportation rates and volumes on the pipeline.
We are increasing our 2008 estimate to $2.72 per unit from $2.58 and introducing our 2009 estimate at $2.80 per unit. Our Hold recommendation and 12-month price objective of $40 remain unchanged.
Read the analyst note on MMP.
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