Citi Reiterates 'Sell' Rating on Ferrellgas Partners LP (FGP), Likes Inergy (NRGY) Instead
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Citi reiterates a 'Sell' rating on Ferrellgas Partners LP (NYSE: FGP). Price target lowered from $20 to $13.
Citi analyst says, "Ferrellgas Partners, L.P. (FGP) reported adjusted EBITDA of $7.2 million for the fiscal fourth quarter - well below our estimate of $25.2 million. For the fourth time in five years, FGP failed to cover its distributions for the full year. This is clearly sub-par performance in an otherwise strong year for retail propane MLPs...At current debt levels, colder year-over-year temperatures and/or aggressive margin expansion are essential for FGP to be able to cover distributions next year. Without either of these, FGP could slip deeper into debt and distributions could increasingly be at risk if past underperformance continues...We recommend overweighting Inergy (Nasdaq: NRGY) and underweighting FGP."
Ferrellgas Partners, L.P. (Ferrellgas Partners) is a holding entity that conducts no operations and has two direct subsidiaries, Ferrellgas Partners Finance Corp and the operating partnership.[SM]
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