UPDATE: Wells Fargo Upgrades Teekay LNG Partners (TGP) to Outperform
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(Updated - September 9, 2016 8:59 AM EDT)
Wells Fargo upgraded Teekay LNG Partners (NYSE: TGP) from Market Perform to Outperform. Analyst Michael Webber noted the stock's discount.
"We are upgrading TGP to Outperform from Market Perform, as we believe TGP’s value proposition is particularly compelling considering its discount to NAV (P/NAV of 0.65x) and recent progress around financing its orderbook," said Webber.
The analyst added, "We believe these factors, combined with the opening of the capital markets and modestly firming LNG industry (rates are now near $40k/day, up from $30k/day most of the year) helps set the stage for an eventual recovery at TGP (committed growth is expected to add roughly $250MM in annual CFVO in 2018-2020). In addition to the attractive valuation and gradually improving financing picture, we estimate distribution coverage ratios between 6.68x – 7.98x for TGP through 2017, with that surplus cash likely used to minimize the risk of a near-term equity need. There’s still a lot of financing work to do at TGP, but given its discount, we think it’s interesting here. Our valuation range implies a total return potential of 21%-35%."
Shares of Teekay LNG Partners closed at $14.07 yesterday.
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