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Deutsche Bank Raises PT On Semgroup (SEMG) To $33, Rates "Hold" On Valuation

 March 29, 2012 01:17 PM


Deutsche Bank (DB) lifted its price target on shares of SemGroup Corp. (NYSE:SEMG) to $33 from $30 reflecting the increased visibility of the company's earnings and cash flows.

Curt Launer, an analyst at DB, rates SEMG "Hold" on valuation, although he assess its fundamental upside as building significant l/t value.

"New capacity at Cushing is on line and more is being added according to the plan SEMG described for this year. The benefits of the additional capacity are also seen in SEMG's 60 percent owned MLP Rose Rock Midstream (RRMS) which we rate Buy with a target price of $27 per unit," Launer wrote.

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Launer continues to watch for additional speculative interest in SEMG based upon the bid made for the company by Plains All American (PAA) last fall. Although the $24 per share bid is significantly less than the current share price it remains outstanding and continually sparks peculation and to future moves by PAA or the involvement of other bidders. "Therefore, we consider a near-term risk for SEMG to be the removal of the speculation in some manner or form," the analyst wrote.

Tulsa, Oklahoma-based SemGroup is engaged in gathering, transportation, storage, distribution, blending, marketing, and other midstream services primarily to independent producers and refiners of petroleum products.

SEMG shares fell 1.01 percent to trade at $29.38 on Thursday.

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