Credit Suisse Downgrades Genesis Energy LP (GEL) to Neutral
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Credit Suisse downgraded Genesis Energy LP (NYSE: GEL) from Outperform to Neutral with a price target of $40.00 (from $47.00) on cautious outlook and quarterly miss.
Analyst John Edwards commented, "GEL's 3Q EBITDA came in lower relative to the Street's estimates on back of lower than expected volumes across the segments. Segment margins were impacted by volume cannibalization and margin compression. Management highlighted 3Q volumes as trough with expected volume recovery from new organic projects. However, based on mgmnt. comments volume increases from the new projects being placed in service appear likely to ramp more slowly than we had previously estimated. Further mgmnt. Expressed caution on midstream generally the next couple of years and for GEL as well as no new projects are developed sufficiently to announce and as such indicated mid-single distribution growth as more likely the next few years."
The firm is trimming 2017/2018 distribution growth rates by ~300bp/year to ~5%/year and reducing 2017 EBITDA and DCF estimates. Adjusted EBITDA for 2017/2018 changes by -7%/-7% and -11%/-11% for DCF/unit.
Shares of Genesis Energy LP closed at $33.79 yesterday.
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