UPDATE: Stifel Raises Suburban Propane (SPH) to Buy on Potenital for Colder Winter
- Top 10 News for 12/2: Crude Rips on OPEC Cut; Starbucks' Schultz Steps Down; Nonfarm Payrolls Flat in Nov.
- Unemployment Rate Drops to 4.6%
- Bond yields slip on U.S. jobs data, euro steady before Italy vote
- Alibaba (BABA) Founder Jack Ma Discuss Plans to Retire; 'I Don't Want to Die at the Office'
- Starbucks Coffee (SBUX) CEO Howard Schultz to Step Down, Appointed Executive Chairman; Kevin Johnson New CEO
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
(Updated - October 13, 2016 8:48 AM EDT)
Stifel upgraded Suburban Propane (NYSE: SPH) from Hold to Buy with a price target of $36.00 (from $34.00). Analyst Brian J. Brungardt, Jr. tied the upgrade in part to expectations for a colder winter.
"Following a review of historical propane volume trends and associated heating degree days, we have a growing confidence the partnership will experience modestly improved volumes in the upcoming winter heating season based on EIA’s Short Term Energy Outlook. Accordingly, we are upgrading units to Buy from Hold and establishing a target price of $36," said Brungardt.
"While it always made intuitive sense for the relationship between propane volumes sold and associated heating degree days, we admittedly did not view enough data to draw strong enough predictive estimates. However, we looked at data between 2012 and 2016 heating seasons to account for the post-Inergy propane acquisition and we believe the resulting regression analysis fits the data set as it produced an R squared of 0.9158," continued the analyst.
Brungardt added, "While we are cognizant of the risks – e.g. another warm winter, significant margin erosion, etc. – we view the current valuation as attractive given the potential EBITDA generation on modest uptick in heating degree days. We note the last three times HDD have been at or below approximately 3,400 during the winter months, the following year has seen an increase in HDD of 15% at the lowest end and the EIA is currently forecasting an increase of 14%."
Shares of Suburban Propane closed at $31.94 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- JPMorgan Raises Rating on CBOE Holdings (CBOE) to 'Overweight'; Analyst Thinks Bats Technology Will Drive Greater Trading Activity
- UPDATE: Oppenheimer Starts Shopify (SHOP) at Perform
- Jefferies Cuts Price Target on Kroger (KR) to $30 Following 3Q and Guidance
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Analyst PT Change, Upgrades
Related EntitiesStifel, Definitive Agreement
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!