UGI Corp. (NYSE:UGI) shares are showing an upward trend in the pre-market session today following the company’s initiation of a process to evaluate strategic alternatives aimed at unlocking and maximizing value for its shareholders. UGI is a distributor and marketer of energy products.
The company’s strategic review is particularly focused on its LPG businesses and it will consider an array of strategic, operational, and financial alternatives. In particular, UGI is looking to mitigate earning volatility while shoring up its balance sheet.
In tandem with the review, UGI is also looking at actions to streamline its cost structure and optimize capital allocation. The company has roped in Goldman Sachs (GS) and J.P. Morgan Securities (JPM) as advisors but has not set a definite timeline for the conclusion of the review.
Today, Mizuho Securities’ Gabe Moreen has reiterated a Hold rating on UGI while maintaining a $33 price target. Moreen believes UGI currently trades at a discount to its sum-of-the-parts value and says the company needs to “tackle its leverage and operational issues head-on, including possible divestitures of the businesses.”
Overall, the Street has a consensus price target of $28 on UGI, alongside a Hold consensus rating. Shares of the company have dropped nearly 38% over the past six months.
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