UBS Raises Price Target on Natural Resource Partners (NRP) to $24 Following 3Q

November 17, 2016 9:46 AM EST
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Price: $36.60 +1.67%

Rating Summary:
    1 Buy, 6 Hold, 1 Sell

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UBS reiterated a Sell rating on Natural Resource Partners LP (NYSE: NRP), and raised the price target to $24.00 (from $14.00), following the company's 3Q earnings report. NRP reported adjusted EBITDA of $59MM above UBS estimates of 52MM. Results benefitted from increased met coal prices with coal royalties.

Analyst Shneur Z. Gershuni commented, "During 3Q, NRP closed its $116MM sale of oil & gas non-operated working interest in the Williston Basin and repaid $82.7MM of debt. Additionally, NRP announced on Nov 3rd, it sold mineral fee interests in Grant County, OK for $7.5MM. That said, liquidity remains a concern as NRP has commitment reductions of $50MM on 12/31/16 $30MM on 6/30/17 and 12/30/17 and $150MM maturities on 6/30/18 under its revolving credit facility. NRP also has $80.8MM of scheduled principal payments through 9/30/17 under serval series of Private Placement Notes. To further address its '18 maturities and leverage concerns NRP has engaged Greenhill & Co. LLC and noted it's in conversation with institutional investors who may provide new equity capital as well as with representatives of debt holders and may determine to pursue a refinancing or exchange of some or all of those notes. We view the increases in met coal pricing as a positive, however uncertainty around sustained pricing remains. NRP's Soda Ash and VantaCore businesses are more stable and we expect to see an uptick in VantaCore with increases in drilling in the Marcellus/Utica with nat gas price increases. We continue to expect NRP to look at asset sales as a way to improve liquidity."

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

Shares of Natural Resource Partners LP closed at $38.40 yesterday.

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