Enterprise Products Partners cut at Citi in favor of Energy Transfer (NYSE:EPD)

Enterprise Products Partners (EPD +0.3%) is little changed after Citi downgrades units to Neutral from Buy with a $25 price target, preferring Energy Transfer (ET +0.4%), which the firm suggests would make a good pair trade.

EPD remains “one of the midstream bellwethers,” citing the company’s integrated business mix, solid balance sheet and the “incrementally favorable” Navitas acquisition, Citi analyst Timm Schneider writes, but he sees “better value elsewhere” in midstream oil and gas given only a ~13% total 12-month return.

Schneider says Citi is initiating a relative pair trade of underweight Enterprise Products and overweight Energy Transfer, forecasting a 52% relative return spread.

Enterprise Products Partners is “deeply discounted, with up to 30% upside in 12-18 months, in addition to the 7.6% distribution yield, Rida Morwa writes in a bullish new analysis posted on Seeking Alpha.