BofA Downgrades Natural Gas and Electric Power Company UGI On Heightened Risks

UGI Corp UGI faces heightened risks due to the increased volatility in commodity markets resulting from the Ukraine-Russia conflict, according to BofA Securities.

The UGI Analyst: Julien Dumoulin-Smith downgraded the rating for UGI Corp from Buy to Neutral, while lowering the price target from $46 to $38.

The UGI Thesis: The risks the company faces in 2022 could “bleed into 2023+” with a likely change in customer behavior impacting volume and margin, Dumoulin-Smith said in the downgrade note.

“While the natural gas side of the business and renewables outlook remains strong, we feel that the larger driver of the narrative will be the margin impact to LPG. Additionally, mgmt.’s previous commentary around working toward becoming less exposed to swings in commodities took a step back with the most recent update,” the analyst wrote.

“We believe that investors, especially risk-averse utility investors will avoid the challenging to predict macro exposure, despite the discounted valuation & above-average growth,” he added.

UGI Price Action: Shares of UGI had declined by 4.29% to $34.78 at the time of publication Monday.

Photo: Magnascan from Pixabay 

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Posted In: Analyst ColorDowngradesPrice TargetCommoditiesMarketsAnalyst RatingsTrading IdeasBofA Securitieselectric powergasJulien Dumoulin-SmithpropaneRussia-Ukraine
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