Positive Outlook for UGI’s AmeriGas: Buy Rating Driven by Operational Improvements and Deleveraging

In a report released today, Julien Dumoulin Smith from Jefferies reiterated a Buy rating on UGI (UGI – Research Report), with a price target of $43.00.

Julien Dumoulin Smith has given his Buy rating due to a combination of factors that suggest a positive outlook for UGI’s subsidiary, AmeriGas. The analyst has observed significant improvements in AmeriGas’s operational performance, particularly with an expected rise in EBITDA driven by enhanced customer service infrastructure and streamlined operations. This operational efficiency is anticipated to lead to a substantial increase in EBITDA margins, positioning AmeriGas closer to its historical performance levels.
Furthermore, the analyst notes that AmeriGas is on a path to reduce its leverage, which is expected to decline significantly by FY26. This deleveraging, coupled with the potential for a favorable re-rating, underpins the positive sentiment. The analyst has also raised the price target for UGI, reflecting the improved estimates for AmeriGas and the potential for multiple expansions in the Global LPG market. These factors collectively support the Buy rating, indicating confidence in UGI’s growth prospects and financial stability.