UPDATE: Stifel Downgrades Capital Product Partners on Valuation

In a report published Friday, Stifel analyst Benjamin Nolan downgraded Capital Product Partners CPLP to Hold from Buy on valuation. According to the report, while analysts believe Capital Product Partners could benefit from increasing product tanker rates with 12 vessels on charter expiring in the next 18 months, it is likely to have a little impact on overall partnership cash flows due to the diverse fleet which also includes crude tankers, containerships and one dry bulk vessel. “CPLP units currently trade at a distribution yield of 8.9%, which is the high end of the historical range,” the report noted. “In fact, since 2007 the units have consistently traded at greater than an 8% yield and on only a few occasions traded less than 9%. Given that our view is it would be challenging to materially increase distributions away from acquisitions which would have to be accompanied by the issuance of new dilutive equity, we believe an 8%-9% distribution yield is appropriate. Furthermore, based on the assets held at the general partner Capital Maritime, we believe material dropdowns are unlikely to transpire until newbuilding deliveries occur primarily in 2015.” CPLP closed Thursday at $10.47.