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Teekay LNG Earns Some ‘Buy’ Recommendations

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Teekay’s revenue sources

Teekay LNG Partners (TGP) derives its revenue from two segments—the Liquefied Gas segment and the Conventional Tanker segment. It derives 74% of its total revenue from the Liquefied Gas segment and the remaining 26% from the Conventional Tanker segment.

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Revenue and earnings estimates

Analysts estimate that Teekay LNG Partners’ 1Q17 revenue will be $104.4 million, 4% higher than the $100 million it reported in 4Q16. Revenue for 2017 is estimated to be $456 million, which is 15% higher than the $396.0 million seen in 2016.

In 2018, Teekay’s revenue is expected to rise to $548 million. Analysts’ 1Q17 EBITDA (earnings before interest, tax, depreciation, and amortization) estimate is $78 million, which is a rise of 5% from the $74.0 million reported in 4Q16. For fiscal 2017, the EBITDA estimate stands at $298 million—22% higher than 2016’s EBITDA of $243 million.

Recommendations for Teekay LNG Partners

Eleven analysts have given recommendations for Teekay LNG Partners. Two analysts gave the company “strong buy” recommendations and two others gave it “buy” recommendations. The remaining seven analysts gave Teekay LNG “hold” recommendations. None of the analysts recommended “sell.” Golar LNG (GLNG), Höegh LNG Partners (HMLP), GasLog (GLOG), and GasLog Partners (GLOP) don’t have any “sell” ratings.

Target price

In February, JPMorgan Chase raised the target price for Teekay LNG to $24 from $20, and Stifel raised the target price to $16 from $14.50. Currently, the consensus target price is $18.60. Based on the price of $17.50 on March 28, 2017, the target price implies a potential upside of $6.7%. If you’re interested in broad exposure to the industrial sector, you could invest in the SPDR Dow Jones Industrial Average ETF (DIA).

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