Dynagas LNG Partners cut its distribution Friday, sending shares tumbling Monday.
At the close, shares of the Tony Lauritzen-led, New York-listed gas player were down 27.6% to $2.91, a drop of $1.11.
The decline, said Jefferies analyst Randy Giveans, was due to the steepness of the distribution cut — from $0.25 to $0.0625.
"The market may have expected somewhat of a cut, maybe a cut in half" but not a cut of three-quarters, he said Monday afternoon.
"They have hinted on the most recent call about the markets not giving them credit for the distribution, so that kind of said, already if the market isn’t giving them credit, maybe a cut is possible."
Dynagas said the cut would help them refinance $250m in notes coming due later this year, with Stifel analyst Ben Nolan noting over the weekend that once the debt is gone, the company can start growing the fleet with organic cash flows.
Even with the drop in share price, Giveans said Dynagas was being fairly valued.
“If you just look at the peer group average of 8 to 9 percent (distribution coverage) that's kind of in line with some of their peers," he said.
Dynagas last cut its distribution last year, from $0.42 to $0.25.
In the third quarter of 2018, the company lost just under $1 million and missed analyst expectations by a cent.
