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Magellan Midstream Delivers Upbeat Results in Q2

Magellan Midstream Partners (MMP) reported stronger-than-expected Q2 results, topping both earnings and revenue estimates.

Magellan Midstream Partners is a publicly-traded company that primarily transports, stores, and distributes refined petroleum products and crude oil. Shares of the company, which has access to nearly 50% of the refining capacity in the U.S., have gained 15% over the past year.

Earnings of $1.26 per share beat analysts’ expectations of $0.99 per share. The company reported earnings of $0.59 per share in the prior-year period.

Revenues jumped 48.7% year-over-year to $653.6 million and exceeded consensus estimates of $564.5 million. The increase in revenues reflected a surge in transportation and terminals revenue that increased to $455.3 million, and higher product sales revenues that increased to $193 million. (See MMP stock analysis on TipRanks)

Additionally, the company’s 2Q distributable cash flow (DCF) increased to $268 million compared to $209.5 million in the year-ago quarter.

Magellan’s CEO Michael Mears commented, “Our strategic asset base continues to demonstrate strength throughout various business cycles, generating another quarter of solid financial results. Magellan’s resilient business model and strong balance sheet position us well to safely and efficiently deliver essential fuels for our nation as the economy recovers and for many decades to come.” 

Looking forward, the company reiterated its full-year guidance. The company forecasts adjusted earnings of $4.25 per share whereas annual DCF is estimated at $1.07 billion for 2021. For the third quarter, adjusted earnings is forecast to be $0.87 per share.

TD Securities analyst Linda Ezergailis recently increased the price target on MMP from $48 to $50 (5% upside potential) and reiterated a Hold rating.

Overall, the stock has a Moderate Buy consensus rating based on 5 Buys and 7 Holds. The MMP average analyst price target of $52.11 implies 11.8% upside potential from current levels.

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