UBS reiterates buy rating on Enterprise Products Partners stock

Investing.com - UBS maintained its buy rating and $40.00 price target on Enterprise Products Partners (NYSE:EPD) stock Monday. The stock, currently trading at $31.31, shows modest upside potential according to InvestingPro Fair Value estimates.

The investment firm slightly adjusted its second-quarter 2025 EBITDA estimate downward to $2,420 million from $2,516 million, citing weaker MTBE-RBOB spreads, unplanned downtime at PDH1, seasonally lower propane and natural gas demand, and reduced ethane exports to China. The current consensus estimate for Q2 2025 EBITDA stands at $2,476 million. Despite these adjustments, EPD maintains its position as a stable dividend player with a 6.86% yield and has raised its dividend for 27 consecutive years, according to InvestingPro data.

UBS projects NGL Pipeline & Services operating margin to reach $1,403 million in the second quarter, compared to $1,418 million in the first quarter of 2025. The segment is expected to benefit from the startup of two new gas processing plants later in the year, each adding 40-50 thousand barrels per day to NGL volumes.

For the Crude Pipeline & Services segment, UBS forecasts an operating margin of $385 million versus $374 million in the previous quarter, noting that earnings in this segment are near bottom but constraints will likely persist until year-end, with higher earnings projected for 2026.

The firm estimates Natural Gas Pipeline & Services operating margin at $354 million compared to $357 million in Q1, while Petrochemical & Refined Products operating margin is expected to be $312 million versus $315 million in the first quarter of 2025.

In other recent news, Enterprise Products Partners reported its first-quarter 2025 earnings, with earnings per share (EPS) of $0.64, which fell short of the analyst forecast of $0.70. However, the company exceeded revenue expectations, posting $15.42 billion compared to the anticipated $14.14 billion. Enterprise also announced a 3.9% increase in its distribution to $0.535 per common unit. Additionally, the company has priced a $2 billion public offering of senior notes, with maturities ranging from 2028 to 2036, intending to use the proceeds for general corporate purposes, including growth capital investments and debt repayment. In a regulatory development, the U.S. Department of Commerce’s Bureau of Industry and Security signaled its intention to deny Enterprise’s requests to export ethane to China, affecting three cargoes amounting to roughly 2.2 million barrels. Despite these challenges, the company continues to focus on significant capital expenditures, with plans for new gas processing plants and enhancements to ethane and ethylene terminals. Analysts from firms like Citigroup (NYSE:C) and Deutsche Bank (ETR:DBKGn) have been involved in managing the company’s senior notes offering, indicating continued interest in Enterprise’s financial activities.

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