On Tuesday, Citi reaffirmed its Buy rating on Chart Industries (NYSE:GTLS) with a price target of $190.00, following the company's impressive earnings report. The firm recognized Chart Industries' robust margin and free cash flow (FCF) performance and noted that management expects the book-to-bill ratio to exceed 1x again in the fourth quarter.
Chart Industries' stock has experienced a surge post-earnings, yet it has only seen an approximate 5% increase this year. Despite the modest annual gain, the stock is trading at an attractive multiple of around 8.6x based on the 2025 EBITDA projections, taking into account investors' adjustments for forward estimate risks.
Citi highlighted the potential for Chart Industries' stock value to climb further, provided the company can maintain consistent and strong FCF, adjusted for seasonality. The company's backlog and healthy margins, coupled with ongoing initiatives to enhance cash conversion, are seen as positive indicators for future performance.
Chart Industries is expected to shed more light on its strategies to improve cash conversion and its aftermarket opportunities during its analyst day on November 12th. In the context of the broader energy sector, where the outlook is being affected by the volatility of commodities, Chart Industries' position, straddling the energy and industrial sectors with opportunities for internal improvements, is considered particularly attractive.
Citi's maintained Buy rating and price target of $190 reflects confidence in Chart Industries' ability to navigate the market and continue delivering shareholder value.
In other recent news, Chart Industries demonstrated a robust financial performance in the third quarter of 2024. The company reported a 22.4% increase in sales, reaching $1.06 billion, and a significant $200.7 million in net cash from operating activities. Orders also saw a substantial increase, totaling $1.17 billion, a 5.4% rise from the previous year, primarily driven by the energy and hydrogen sectors.
Analysts from CL King and Stifel have expressed confidence in Chart Industries' performance. CL King maintained a buy rating on the company with a price target of $168, while Stifel raised its price target to $200, also maintaining a buy rating. Both firms emphasized the company's solid order book and backlog, indicating a healthy pipeline of business.
Recent developments include updates to the company's guidance for full-year 2024 and 2025. For 2024, sales are projected between $4.2 billion and $4.3 billion, with an adjusted EBITDA expected to be approximately $1.015 billion to $1.045 billion. Looking ahead to 2025, Chart Industries expects sales to be between $4.65 billion and $4.85 billion, with adjusted EBITDA between $1.175 billion and $1.225 billion.
InvestingPro Insights
Chart Industries' recent performance aligns with Citi's bullish outlook, as evidenced by several key metrics from InvestingPro. The company's revenue growth of 46.41% over the last twelve months as of Q3 2024 demonstrates strong market demand for its products. This growth is complemented by a robust EBITDA growth of 81.95% over the same period, indicating improved operational efficiency.
InvestingPro Tips highlight that Chart Industries has a perfect Piotroski Score of 9, suggesting strong financial health and potential for future growth. Additionally, the company is trading at a low P/E ratio relative to its near-term earnings growth, which supports Citi's view of an attractive valuation.
The stock's recent performance has been noteworthy, with InvestingPro data showing a 14.58% return over the past week and a 22.01% return over the last three months. This momentum aligns with Citi's positive outlook and the post-earnings surge mentioned in the article.
For investors seeking more comprehensive analysis, InvestingPro offers 14 additional tips for Chart Industries, providing deeper insights into the company's financial position and market potential.
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