UBS Cuts Price Target on Dorian LPG (LPG) to $6.50; Remains Sidelined
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UBS maintained a Neutral rating on Dorian LPG Ltd. (NYSE: LPG), and cut the price target to $6.50 (from $8.00), as VLGC rate environment continues to see challenges. Vessel rates averaged ~$12,000/d QTD compared to ~$20,000/d last quarter. Seasonality and wider arbs may lift rates. However, an expected 18% increase to the overall VLGC fleet through 2017 may offset potential positive catalysts.
Analyst Spiro Dounis commented, "We lower our NAV-derived PT to $6.50 from $8.00 to reflect an ongoing challenged VLGC rate environment. We believe a wider discount to NAV is now justified as rates struggle to find a floor and begin a recovery. Since our last update peer discounts to NAV have widened by 0.2x. Based on historical cycles, we expect VLGC rates to remain low but gradually approach the 10-yr average over the next 18 months, this is longer than we originally expected (~6 months)."
Shares of Dorian LPG Ltd. closed at $6.27 yesterday.
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