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UPDATE: Credit Suisse Upgrades AmeriGas Partners LP On Valuation

Dwight Einhorn

In a report published Friday, Credit Suisse analyst John Edwards upgraded the rating on AmeriGas Partners LP (NYSE: APU) from Underperform to Neutral, and raised the price target from $43.00 to $44.00.

In the report, Credit Suisse noted, “APU reported adjusted EBITDA $331.2mm, in-line with our estimate of $334.5mm and higher than the Street's $306.1mm. DCF came in at $272.5mm, 3% below our estimate of $280.5mm, driven by higher maintenance cap ex spend timing. F2Q14 propane margins came in at $1.09/gal, compared to our estimate of $1.01/gal due to higher avg. selling prices. Mgmt increased F2014 EBITDA guidance by $8mm, to $660-$675mm vs. last quarter's guidance.

"Our estimates remain towards the higher end of this range. Given APU's lagging performance (down 1% YTD), our TP of $44 (from $43) suggests a total return potential of ~10%, including APU's attractive 8% yield. This is more in line with our Neutral-rated names, hence the upgrade.”

AmeriGas Partners LP closed on Thursday at $44.64.

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