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

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

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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 would drive a discount within the firm’s forecast EPS compound annual development of 6%-10%.

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

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

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

UGI Corp. (UGI) affords a gradual dividend historical past, however “buyers ought to be cautious of different variables which will deteriorate the enterprise,” Six-5 Analysis writes in an evaluation revealed on Looking for Alpha.

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