Oil & Gas - Energy - Commodities - Resources (OILBRENT)

[Timothy Smith]

$MEP - Midcoast Energy Partners is downgraded (MEP -10.3%) to Underperform from Outperform with a $5 price target, slashed from $16, at Credit Suisse, which says that although the company made progress in 2015, it was inadequate in the face of its rapidly deteriorating fundamentals.

In its Q4 earnings report, MEP's Q4 adjusted EBITDA of $27M came in better than expected, but distributable cash flow of $16 million fell short of estimates due to high maintenance capex and interest expenses, and the company’s guidance for 2016 came in 39% below the consensus, prompting a 21% plunge in the unit price yesterday.

MEP needs $40M in support from Enbridge Energy Partners (EEP +5.2%) to pay 2016 dividends, Credit Suisse says.