El Paso a Buy with a Lower Target

We are maintaining our Buy recommendation on El Paso Corp. (EP) but lowering our target price from $15.00 to $13.00 per share. The stock has fallen +70% since July on worries of liquidity, execution risk on its backlog of pipeline projects and soft commodity prices.

However, we believe that the company's experienced management and ability to generate liquidity will allow the company to weather the current economic and financial storm. We see the pipeline business obtaining the necessary financing to carry its project backlog setting it up for attractive long-term EBIT growth.

We believe that the negative near-term macro-economic backdrop has been priced into both its pipeline and E&P businesses and the upside potential outweighs the downside.

Read the full analyst report on EP