Wells Fargo Upgrades Suburban Propane (SPH) to Outperform; Valuation Call

Wells Fargo upgraded Suburban Propane (NYSE: SPH) from Market Perform to Outperform, price target range lowered to $55-$57 from $58-60.

Wells analyst says, "Since hitting its 52-week high in late January 2011, SPH’s unit price is down 24% compared to a decline in the Wells Fargo Index of 8% and the S&P 500 Index of 7%. Our valuation range for SPH is now $55 to $57, down from $58 to $60 based on more conservative distribution growth estimates going forward. SPH currently trades at a yield of 7.8%. In our view, SPH is still currently in a cash generation mode, with longterm success dependent upon micromanaging the propane business and using its financial flexibility ($4.55 per unit of cash on the balance sheet) to grow by acquisition. We are adjusting our F2011 and F2012 DCF per unit estimates to $4.00 and $3.95 from $3.85 and $4.02, respectively."

For more ratings news on Suburban Propane click here and for the rating history of Suburban Propane click here.

Shares of Suburban Propane closed at $43.90 yesterday.

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