UBS Price Target On Teekay LNG Adjusted Lower

UBS analysts lowered their price target on Teekay LNG Partners L.P. TGP to $15 from $21. The brokerage reiterated its Buy rating as it believes a stream of potential positive catalysts to drive the unit price higher.

In a research note, the analysts said, "Specifically, the majority of project debt remains open – the successful commitment of the majority of this debt in the next 12 month should alleviate an overhang. Significant debt maturities in 2018 may also be pressuring the units; however, we expect a slowly improving LNG/oil market to provide support for a successful refinance. Finally, we see the closure of both aforementioned items providing management with enough clarity to lift the distribution which may attract yield focused investors back into the units."

The analyst estimate Teekay LNG equity component of future CAPEX to be about $163 million that should mainly be covered by cash, as well as restricted cash of $220 million. The brokerage believes cash flow from operations would be enough to fund amortizing debt of $103 million in 2016 and $225 million in 2017.

The analysts expect, "Over $800mm matures/amortizes in 2018. We believe TGP will need to refinance 2/3rds of this debt. Based on management's commentary and a gradually improving oil/LNG market we feel comfortable in assuming a successful refinancing in 2018 (or earlier)." The brokerage also adjusted NAV for the revised funding structure including more sales.

The stock traded 6.76 percent down on Tuesday.