Analyst Gabe Moreen of Mizuho Securities reiterated a Sell rating on Suburban Propane (SPH – Research Report), with a price target of $17.00.
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Gabe Moreen has given his Sell rating due to a combination of factors influencing Suburban Propane’s stock outlook. The company’s financial performance has been affected by weather conditions, with a warm period leading to the lowest adjusted EBITDA since 2017, which has raised concerns about its financial stability. Despite colder weather expected to improve results in the latter part of FY25, the warm start to the heating season has already impacted early quarters.
Additionally, while recent acquisitions are seen as beneficial, they add to the company’s leverage, which is already considered high. Moreen points out that the company’s fundamentals, particularly its valuation, appear stretched, and the anticipated growth in EBITDA is modest compared to market expectations. Furthermore, the improvement in stock valuation is attributed more to technical market factors rather than genuine business performance improvements, reinforcing the underperform rating.