Gabe Moreen, an analyst from Mizuho Securities, reiterated the Sell rating on Suburban Propane (SPH – Research Report). The associated price target remains the same with $17.00.
Gabe Moreen has given his Sell rating due to a combination of factors concerning Suburban Propane’s performance and market conditions. The warmer-than-expected weather, particularly in key heating markets, has led to a decrease in demand for propane. This weather trend, substantially warmer by 10-15% compared to historical averages, has resulted in lower-than-anticipated propane volumes sold. Additionally, Moreen points out that the company’s stock price had previously benefited from technical factors, such as its inclusion in MLP-focused indices, which may have temporarily inflated its valuation.
Furthermore, Moreen highlights concerns over Suburban Propane’s financial health, noting that the company’s leverage remains high. This elevated debt could limit the company’s ability to make strategic moves, such as acquisitions, which might otherwise improve its position. With the onset of warmer seasons and a return to more normalized trading patterns, the fundamentals of the business are coming to the forefront as a contributing factor to the stock’s performance. Given these challenges, including the impact of a warm weather streak on earnings and the constraints posed by the company’s balance sheet, Moreen maintains an Underperform rating with a price target of $17.
Based on the recent corporate insider activity of 87 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of SPH in relation to earlier this year.
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Suburban Propane (SPH) Company Description:
Suburban Propane Partners LP engages in the business of liquefied petroleum gas business. It operates through the following business segments: Propane; Fuel Oil and Refined Fuels; Natural Gas and Electricity; and All Other. The Propane segment engages in natural gas processing and petroleum refining. It also used in residential and commercial applications, industrial applications and agriculture. The Fuel Oil and Refined Fuels segment refers to the marketing and distribution of fuel oil, kerosene, diesel fuel and gasoline primarily to the northeast region of the United States. The Natural Gas and Electricity segment pertains to the generation, transmission, and distribution of natural gas and electricity among residential and small commercial customers. The All Other segment include the sale, installation and service of whole-house heating products, air cleaners, humidifiers, and space heaters to the customer who uses propane, fuel oil, natural gas and electricity businesses. The company was founded by Mark Anton in 1928 and is headquartered in Whippany, NJ.
