UBS Downgrades Westlake Chemical Partners LP (WLKP) to Neutral

UBS analyst Shneur Gershuni downgraded Westlake Chemical Partners LP (NYSE: WLKP) from Buy to Neutral with a price target of $25.00 (from $23.00).

The analyst comments "With global demand recovering from the COVID-19 pull back and recent strength in the spot ethylene market we believe market conditions have stabilized enough for WLKP to resume its growth strategy in order to maintain its 1.1x distribution coverage target and reinstate distribution growth. We now assume in our model that WLKP will drop down an additional 2.5% interest in OpCo in 4Q21 and an additional 2.5% drop in 4Q22, smaller than historical drops as in the near term as we expect WLKP to fund drops with retained cash flow and debt, before resuming 5% drops with equity in '23 and going forward. WLKP has outperformed the AMZ throughout the COVID volatility and is trading slightly above its Jan/Feb '20 highs while the Alerian Index remains roughly 25% below its Jan/Feb '20 levels. Despite having a clearer line of sight to market stability and the resumption of growth, we believe the market has priced in near term growth potential and therefore are downgrading WLKP to Neutral from Buy."

For an analyst ratings summary and ratings history on Westlake Chemical Partners LP click here. For more ratings news on Westlake Chemical Partners LP click here.

Shares of Westlake Chemical Partners LP closed at $24.72 yesterday.

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