Monday, September 13, 2010

Wells Fargo (NYSE:WFC) Initiates Coverage on Chesapeake Midstream (NYSE:CHKM)

Chesapeake Midstream Partners (NYSE:CHKM) has captured a lot of attention from the financial world recently, with Wells Fargo (NYSE:WFC) being the latest to initiate coverage on them, starting off with a "Market Perform" rating.

"CHKM has 100% fee-based cash flow and visible growth prospects tied to its GP's drilling plans and potential drop-down opportunities. We forecast a five-year distribution compound annual growth rate (CAGR) of 9.3%, assuming average annual (1) acquisitions of $300 million and (2) growth capex of $510 million. However, CHKM's attractive attributes and above-average growth profile appear fairly reflected in the current valuation, in our view. Approximately 80% of CHKM's distribution is tax deferred," said the Wells analyst.

Other companies recently initiating coverage on Chesapeake Midstream are UBS (NYSE:UBS), who started them with a "Buy"; Goldman Sachs (NYSE:GS) and Bank of America (NYSE:BAC), with a "Neutral"; and Barclays (NYSE:BCS) with an "Overweight."

Chesapeake Midstream Partners is a provider of natural gas gathering and processing services.

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