Dynagas Stock Sits Out Oil Rally After Downgrade

Shorts have been increasing their exposure to DLNG stock

Apr 24, 2018 at 10:38 AM
    facebook twitter linkedin

    Shares of Dynagas LNG Partners LP (NYSE:DLNG) plunged 8.4% last Wednesday, April 18, after the energy transportation company cut its quarterly dividend in order to generate long-term cash flow. Today, however, Wells Fargo downgraded DLNG stock to "underperform" from "market perform," and slashed its price target to $6 from $13, saying the move may not be enough to overcome "liquidity hurdles."

    In reaction, DLNG shares have plummeted 3.8% to trade at $9.13, hitting a two-year low of $8.49 out of the gate. This recent price action just echoes the stock's trend over the past 12 months, with Dynagas down 46% year-over-year. What's more, the equity has failed to capitalize on rising oil prices, shedding nearly 10% so far in April, even as crude futures boast a 5.9% month-to-date gain at this point.

    As such, embattled Dynagas stock is at risk for more downgrades and/or price-target cuts, which could exacerbate the equity's troubles. At last night's close, two of six analysts maintain a "buy" rating on DLNG -- with not one "sell" on the books -- while the average 12-month price target of $12.69 is a 41% premium to present trading levels.

    Although currently on the short-sale restricted (SSR) list, more selling from shorts could keep pressure on DLNG stock. Though short interest jumped 11.7% in the most recent reporting period to 430,000 shares, these bearish bets account for just 2.2% of the stock's available float.


    Special Offers from Schaeffer's Trading Partners