On Wednesday, Deutsche Bank (ETR:DBKGn) updated its stance on New Fortress Energy (NASDAQ:NFE), shifting from a Sell to a Hold rating. The adjustment comes with a new price target set at $11.00, a rise from the previous $7.60 target. With the stock currently trading at $10.55 and down over 70% year-to-date, the revision was prompted by a reassessment of the company's financial health following recent developments. InvestingPro data shows the company has maintained profitability over the last twelve months despite significant market challenges.
The analyst from Deutsche Bank noted that the upgrade reflects a positive shift in New Fortress Energy's financial position. This change in perspective is attributed to the company's proactive measures to enhance its cash liquidity and extend debt maturities. According to InvestingPro data, the company carries a total debt of $8.62 billion with a concerning current ratio of 0.38, highlighting the importance of these recent financial maneuvers. Specifically, a $400 million equity issuance completed in October and a significant debt refinancing deal that extended near-term debt maturities to the year 2029 contributed to a more stable outlook.
The improved financial situation of New Fortress Energy has led to an increase in the 12-month price target for its shares. The new target is based on shares trading at 8.5 times the enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) ratio. This is an uptick from the previous valuation multiple of 8.0 times EV/EBITDA.
The analyst highlighted that the original downgrade to Sell earlier in October was due to several concerns, including the company's capital structure and risks associated with recontracting and margin compression, particularly in Puerto Rico. However, the recent strategic financial maneuvers have alleviated some of these concerns, leading to a more favorable view of the stock.
In summary, New Fortress Energy's stock rating has been upgraded by Deutsche Bank due to enhanced liquidity and reduced maturity risk, as evidenced by the company's recent equity issuance and debt refinancing efforts. The analyst's updated price target reflects a more optimistic valuation of the company's shares in the near term. InvestingPro analysis indicates the stock is currently trading below its Fair Value, with additional insights available in the comprehensive Pro Research Report, which offers deep-dive analysis of this $2.65 billion market cap company.
In other recent news, Golar LNG (NASDAQ:GLNG) Limited has seen significant progress in its floating liquefaction natural gas vessel (FLNG (OL:FLNG)) projects, with its FLNG segment reporting total operating revenues of $168.6 million for the nine months ended September 30, 2024.
However, the company's consolidated net income for the same period saw a notable increase to $65.8 million from the previous year's $28.2 million, largely attributed to the operational performance of the FLNG Hilli and adjustments in the company's derivative instruments related to oil and gas pricing. Golar LNG's Adjusted EBITDA stood at $181.3 million, reflecting a decrease primarily due to lower realized gains on FLNG Hilli’s oil and gas derivative instruments.
In other recent developments, New Fortress Energy has amended its credit agreement and initiated a process to issue debentures not exceeding R$4.5 billion through its indirect subsidiary, PortoCem Geração de Energia S.A. These proceeds are intended for reimbursing expenses, debt, and funding remaining construction costs for the PortoCem Power Plant in Brazil.
In its Q3 2024 earnings call, New Fortress Energy reported an adjusted EBITDA of $176 million, aligning with prior forecasts, and announced a modest reduction in Q4 guidance due to maintenance in FLNG operations. Despite this, the company sold its first full cargo to Europe and made significant progress on various projects across its operational regions. The company's adjusted EBITDA forecast for 2025 is $1.3 billion, with free cash flow available for debt reduction expected to exceed $1 billion.
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