Goldman Sachs intiated coverage of Williams Energy (WEG) and added the stock to its recommended list.
Analyst David Fleischer says the company was created by its parent, Williams Cos., to consolidate midstream energy assets through a tax efficient Master Limited Partnership (MLP) structure. He expects significant assets to be sold from Williams to Williams Energy on an accretive basis for the parent company.
Fleischer also thinks the company will grow via accretive third party acquisitions, and will be able to do so due to major support from Williams, the restructuring of the midstream energy industry, and the company's very low cost of capital as a MLP.
He sees 15% long-term distribution growth -- tops in the sector, and has a $45 target.