On Monday, Bernstein initiated coverage on Cheniere Energy (NYSE:LNG) with an Outperform rating and a price target of $217.00. The firm highlighted the company as a top player in the natural gas export market, emphasizing its status as the largest exporter of U.S. gas and one of the most significant globally.
Cheniere's operations include approximately 45 million tonnes per annum (MTA) of liquefaction capacity across two major sites on the U.S. Gulf Coast – Corpus Christi and Sabine Pass. With nine liquefaction trains, the company is focused on optimizing and expanding these existing assets.
Cheniere's business model, which relies heavily on take-or-pay contracts, ensures a consistent and reliable EBITDA, even during periods of market oversupply. According to Bernstein, these contracts alone could justify a valuation of around $200 per share. Additionally, the firm pointed out Cheniere's ability to sell uncontracted volumes at spot rates, which can lead to variable EBITDA based on international price arbitrage.
In the previous year, when international gas prices soared, Cheniere leveraged the higher earnings to expedite debt repayment, advancing towards an investment-grade credit rating.
"Having largely met their debt target, we believe Cheniere will reach a free cash flow inflection point in 2025 and be able to pay out close to $20/sh. even as they fund growth capex for Corpus Christi stage 3," said the analysts.
Bernstein also initiated coverage on Cheniere Energy Partners LP (NYSE: NYSE:CQP) with a Market-Perform rating.
In other recent news, Cheniere Energy demonstrated solid financial performance in Q1 2024, posting a consolidated adjusted EBITDA of about $1.8 billion and a distributable cash flow of around $1.2 billion. Despite production challenges, the company achieved a net income of approximately $500 million and met all customer commitments.
TD Cowen has expressed continued confidence in Cheniere Energy, raising the price target to $185 from $178 while maintaining a Buy rating. This adjustment follows investor meetings hosted with Cheniere Energy's Investor Relations. The firm anticipates a shift in the company's equity movement in the third quarter when the company is expected to provide guidance on its 2025 spot volumes.
The resolution of the non-Free Trade Agreement permit pause and the sanctioning of Corpus trains 8 and 9 could serve as significant developments for Cheniere Energy. The company also reported progress on expansion projects, expecting first LNG by the end of 2024 and completion before the end of 2026. Cheniere Energy reconfirmed its full-year guidance, with an expected consolidated adjusted EBITDA of $5.5 billion to $6 billion and a distributable cash flow of $2.9 billion to $3.4 billion. The company has repurchased over 7.5 million shares for approximately $1.2 billion and plans a new buyback plan before year-end.
InvestingPro Insights
Cheniere Energy's position as a leading player in the natural gas export market is further illuminated by key financial metrics and market performance data. According to InvestingPro, Cheniere boasts a robust market capitalization of $37.75 billion, reflecting investor confidence in its business model and market position. The company's Price to Earnings (P/E) ratio stands at 7.96, with a slight adjustment to 7.62 over the last twelve months as of Q1 2024, indicating a potentially attractive valuation relative to earnings.
InvestingPro Tips highlight the company's consistent dividend growth, with dividends increasing for 3 consecutive years, which may appeal to income-focused investors. Additionally, the stock's low price volatility could be a favorable factor for risk-averse investors. While net income is expected to drop this year, analysts remain optimistic about profitability, supported by a strong return over the last five years. For readers interested in a deeper analysis, there are additional InvestingPro Tips available, providing valuable insights into Cheniere Energy's financial health and market prospects.
For those looking to make informed investment decisions, you can find more comprehensive analysis and tips on Cheniere Energy at InvestingPro. Don't forget to use the exclusive coupon code PRONEWS24 to receive an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of financial information and expert insights.
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