SPH - Suburban Propane Partners UGI Corp. started at Neutral at Mizuho

2023-04-26 15:49:24 ET

Suburban Propane Partners ( NYSE: SPH ) is initiated with a Neutral rating and $17 price target at Mizuho, which said the company is a strong operator within a propane distribution landscape that is structurally sound but "wanting for growth opportunities."

Suburban Propane's ( SPH ) acquisition of renewable natural gas assets should help address the growth concerns, but Mizuho's Gabriel Moreen thinks investors will need to see initial results before awarding credit.

Distribution cuts in 2018 and 2020 "created a more sustainable balance between financial obligations and cash flows, but there is still work to do to insulate SPH's balance sheet against periods of warm weather or a recessionary environment," Moreen wrote.

The Mizuho analysts also started UGI Corp. ( NYSE: UGI ) at Neutral with a $38 PT, foreseeing medium-term weakness at UGI's Global LPG businesses - AmeriGas and UGI International - "in the form of softer margins and higher capex in order to achieve a 'rebuild' of the subsidiaries that typically generate cash flow for UGI's corporate obligations."

More Seeking Alpha analysis:

• Suburban Propane Partners: Turning Waste Into Future Distribution Growth
• UGI Corp.: Propane and LPG vs. Natural Gas Outlook

For further details see: