UBS Downgrades Ferrellgas Partners LP (FGP) to Sell

UBS downgraded Ferrellgas Partners LP (NYSE: FGP) from Neutral to Sell with a price target of $15.00 (from $17.00).

Analyst Shneur Gershuni commented, "In its 10Q, FGP noted the possibility that one of its customer's, Jamex, may be unable to fulfil its crude sourcing commitments and payment obligations. Based on our read of a previous disclosure in the 10K, FGP's contract with Monroe, to supply its Trainer refinery, MVC is subject on a monthly basis to a min avg delivery of 35 MBbls/d per mth. Our assumption would be that if this requirement was not met the contract could be at risk or be re-negotiated. On its CC, mgmnt noted that it is currently in constructive conversation with Monroe to mitigate this risk. It was also noted that FGP is operating within the confines of its agreement and if vols were to fall below 35 MBbls/d it would not be an out for Monroe. However, due to the uncertainty around the contracts and the associated risk surrounding the outcomes of negotiations when combined with our overall view of retail propane margin compression, we are downgrading FGP to a Sell."

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 $17.25 yesterday.

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