Buckeye Partners Retains A Buy

We are maintaining our Buy recommendation on Emmaus, Pennsylvania-based Buckeye Partners, L.P. (BPL), a master limited partnership (MLP) and one of the largest independent common carriers of refined petroleum products in the U.S in terms of volume delivered, with approximately 5,400 miles of pipelines, located mostly in the Northeast and the Midwest.

The weakening economy, falling commodity prices and tight credit have led to dramatic slides across equity markets. BPL has fallen 25% from mid-’08 and now has a distribution yield that is trading more than 100 basis points above historical ranges.

The partnership has a diversified base off high quality, stable assets that will continue to generate solid cash flows. We believe that combined with internally generated cash, the available +$325 MM of liquidity under its credit facility will allow the partnership to execute its long-term business strategies while growing distribution 6% in 09.

Trading around $37 per unit, our 12-month target price of $46 represents an approximate 33% return (24% from unit price appreciation and 9.0% from the current distribution yield). We are maintaining our current Buy recommendation but are decreasing our twelve month target price from $47 to $46 per unit.

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