USA Compression raised at Mizuho as conservative posture stands out vs. peers

USA Compression Partners (NYSE:USAC) +1% in Thursday's trading as Mizuho upgrades shares to Neutral from Underperform with a $26 price target, raised from $23, citing the company's adherence to capital discipline and supply growth expectations.

The tailwinds that have catalyzed USA Compression Partners' (USAC) strong operational performance remain intact, as a tight compression market should allow for higher unit margins, longer contract tenors and higher fleet utilization, Mizuho's Gabriel Moreen says.

USA Compression (USAC) has been more conservative than peers on new unit orders, but it "seems to have a newfound appreciation for balance sheet simplification that could allow the story to gain traction with new investors," according to Moreen.

"With deleveraging/balance sheet simplification well underway, USAC stands to capitalize on its 'midstream' attributes without cutting its distribution," the analyst writes.