UPDATE: Credit Suisse Downgrades World Point Terminals LP to Underperform, Lowers PT on Lower Distribution Forecast

In a report published Tuesday, Credit Suisse analyst John Edwards downgraded the rating on World Point Terminals LP WPT from Outperform to Underperform, and lowered the price target from $24.00 to $19.00. In the report, Credit Suisse noted, "We initiated on World Point in 2013 with an Outperform rating due to what we believed was a solid distribution growth outlook of ~8-9%, yet in 2014 WPT mgmt. held distributions at $0.30 each quarter ending the year with 1.25x coverage. But given sparse mgmt. communication evidenced by conference calls held just once per year and no clarity on distribution growth, we believe there is rising risk regarding the growth outlook and even whether or not management will increase the distributions to investors at all. In defense of management, we continue to see relatively solid business fundamentals in terms of cash flow stability, the balance sheet (no debt), and distribution coverage. Further, acquisitions and dropdowns have materialized. All that said, however, unit holders have been given short shrift and the commentary from management regarding future increases was not encouraging. Consequently, we have conservatively reduced our distribution growth outlook, assuming no increases in 2015 and $0.05/year or ~4% growth per year thereafter." World Point Terminals LP closed on Monday at $18.51.
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Posted In: Analyst ColorDowngradesAnalyst RatingsCredit SuisseJohn Edwards
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