Ferrellgas Partners (FGP): Cutting Ests And Reiterating Sell - UBS

September 29, 2016 8:19 AM EDT
Get Alerts FGP Hot Sheet
Price: $9.66 -2.91%

Rating Summary:
    0 Buy, 3 Hold, 5 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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UBS analyst, Shneur Gershuni, reiterated his Sell rating on shares of Ferrellgas Partners LP (NYSE: FGP) and cut his price target to $10 from $15 after FGP reported that due to increased leverage and higher debt levels, from weaker propane due to warmer weather and midstream operations, that its board could reduce its distribution from $2.05 to roughly $1.00/unit on an annualized basis.

This decision is not final, but is an option to reduce debt and leverage ratio. FGP also announced an amendment to its credit facility in which its leverage ratio was increased to 5.95x-6.05x over the next six quarters from 5.50x currently.

On September 1st, FGP also announced the termination of its agreement with Jamex, and FGP noted in its 10K that it does not expect Jamex or Bridgers largest customer to have any material contribution to EBITDA or revenue in the future.

The analyst, cut 2017/18/19 Adj. EBITDA estimates to $313/$316/$324MM from $359/$369/$377MM on the cancellation of the Jamex contract and further headwinds expected in FGP's midstream segment.

He cut 2017/18/19 DPU estimates to $1.00/$1.00/$1.00/unit from $2.05/$2.05/$2.05/unit on our expectation that the board will choose to move forward with a distribution cut, as a way to reduce both debt and its leverage ratio.

For an analyst ratings summary and ratings history on Ferrellgas Partners LP click here. For more ratings news on Ferrellgas Partners LP click here.

Shares of Ferrellgas Partners LP closed at $13.00 yesterday.

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