Morgan Stanley Downgrades Enterprise Products (EPD) as Growth Story Fades

Enterprise Products Partners L.P. (NYSE:EPD) is included among the Best Stocks for a Dividend Achievers List.

On December 18, Morgan Stanley downgraded Enterprise Products Partners L.P. (NYSE:EPD) to Underweight from Equal Weight and set a $34 price target. Keeping pace with the broader midstream group “is becoming harder to make,” the analyst wrote. Buybacks alone are unlikely to change that. Without a clearer growth story, Morgan Stanley does not see unit repurchases as enough to drive a meaningful re-rating.

That view comes as Enterprise Products Partners L.P. (NYSE:EPD) moves into a different phase of its cycle. The partnership is wrapping up a heavy investment period that started back in 2022. Roughly $6 billion of organic projects are set to enter commercial service in the second half of this year. These assets won’t deliver their full impact overnight, but as volumes build, cash flow should follow.

This year marks the high point for spending. Capital investment reached about $4.5 billion. Next year, management expects growth capital to drop sharply, down to roughly $2.2 billion to $2.5 billion. If the numbers play out, free cash flow should rise meaningfully in 2026. That extra cash gives Enterprise Products Partners L.P. (NYSE:EPD) more room to reward unitholders. The partnership recently expanded its repurchase authorization to $5 billion from $2 billion. It also continues to lean on its long-standing distribution record. The company has raised its payout for 27 straight years, including a 3.8% increase over the past year.

Enterprise Products Partners L.P. (NYSE:EPD) operates one of the largest midstream networks in North America.

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Disclosure: None.