UGI reduce to Promote equal at BofA as transformation brings rising pains (NYSE:UGI)

UGI Corp. (NYSE:UGI) -3.3% in Wednesday’s buying and selling after Financial institution of America downgraded shares to Underperform from Impartial with a $41 worth goal, trimmed from $43, pointing to extended headwinds that might drive a discount within the firm’s forecast EPS compound annual development of 6%-10%.

UGI (UGI) is diversifying into renewables with robust projected returns, however the core AmeriGas U.S. propane and worldwide propane segments face growing unsure profitability outlooks, in response to BofA’s Julien Dumoulin-Smith.

The corporate is divesting and winding down operations in its worldwide phase, leading to a $220M Q1 2023 loss because of the phase’s first divestiture, its U.Ok. franchise, introduced final month; Dumoulin-Smith sees a sale of the phase’s French franchise later within the quarter probably leading to comparable losses.

Administration is implementing steps to enhance AmeriGas’ aggressive place following the phase’s enterprise transformation after a number of years of buyer attrition, however the analyst believes this can take time, particularly within the growth-challenged propane market, presenting further strain in FY 2023.

UGI Corp. (UGI) gives a gradual dividend historical past, however “traders needs to be cautious of different variables which will deteriorate the enterprise,” Six-5 Analysis writes in an evaluation revealed on In search of Alpha.