Why ONEOK Partners LP Might Outperform

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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 upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of ONEOK Partners LP climbed 1% this morning after Goldman Sachs upgraded the natural gas storage and transportation company from "sell" to "neutral".

So what: Along with the upgrade, analyst Theodore Durbin raised his price target to $57 (from $55), representing about 8% worth of upside to yesterday's close. While momentum traders might be turned off by the stock's sluggish action in 2013, Durbin believes that ONEOK's announcement this morning -- it will spend up to $780 million on projects in the oil-rich area around Williston, ND -- should give its prospects a decent boost going forward.

Now what: Goldman believes that ONEOK's risk/reward trade-off is pretty balanced at this point. "On the announcement, we lower our 2015 distributable cash flow (DCF) estimate for OKS by 5% on higher financing costs, maintain 2016, but raise our 2017 estimate by 6% assuming 6x EBITDA multiple project returns, similar to other 'bolt-on' organic returns," noted Goldman. With the stock still off about 15% from its 52-week highs and sporting a 5%-plus dividend yield, ONEOK Partners is definitely worth a look. 

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The article Why ONEOK Partners LP Might Outperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends ONEOK Partners, L.P.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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