Reiterating his cautious approach towards Buckeye Partners (BPL), Zacks senior oil industry analyst Sheraz A. Mian explains why the future looks conservative for the oil and pipeline company:

'Following the change in the ownership in June this year, new leadership has taken charge at Buckeye Partners and its general partner (BGH). The new owners - ArcLight Capital Partners, Kelso & Company, and Lehman Brothers bring strong industry background and experience. While we do not expect any operational changes in the near term, we view the change of control as a net long-term positive.

'Our Hold recommendation remains unchanged as we continue to believe that current valuation adequately reflects Buckeye's middling growth prospects. We also expect the ongoing weakness in the credit and equity markets to continue weighing on MLP valuations in the near to medium term.

'Despite their status as low-beta instruments, MLP common units have been under pressure in the current sub-prime-related market weakness. A key reason, in our view, for this high degree of unwanted correlation with the broader equity markets is the group's exclusive reliance on the equity and credit markets for growth finance. MLPs by definition retain very little cash and rely almost exclusively on the markets for funding growth projects as well as acquisitions. A prolonged credit crunch and restricted access to the equity markets are, therefore, major headwinds for the MLP group as a whole.

'Our new target price of $48, down from $49 before, is reflective of a narrower yield-spread assumption and incorporates our forecast for the yield on the 10-year Treasury bond and our outlook for the partnership's distributions over the next 12 months.'