Monday, BofA Securities updated its outlook on Chart Industries (NYSE:GTLS), increasing the price target to $185 from the previous target of $180, while maintaining a Buy rating on the stock. The firm's decision is based on a discounted cash flow valuation, which is considered more appropriate for assessing GTLS's value in the current market environment.
According to BofA Securities, the revised price objective reflects a comprehensive earnings and cash flow projection up to the year 2030. This forecast period is expected to showcase a generally increasing trend in free cash flow for Chart Industries. The firm has applied a terminal growth rate of 2.125% beyond this period, indicating confidence in the company's growth potential, particularly due to opportunities arising from the energy transition.
The valuation methodology employed by BofA Securities relies on an 8.5% weighted average cost of capital (WACC). This rate is used to discount the company's projected future cash flows, thereby determining the present value and informing the new price target.
Chart Industries specializes in the manufacturing of highly engineered equipment servicing multiple applications in the energy and industrial gas markets. The company's products are integral to the liquefaction and storage of gases such as oxygen, nitrogen, argon, and natural gas, positioning it to benefit from the ongoing energy transition.
InvestingPro Insights
Complementing BofA Securities' positive stance on Chart Industries, InvestingPro data presents a robust financial picture for the company. With a market capitalization of $5.59 billion and a remarkable revenue growth of 110.73% in the last twelve months as of Q1 2024, Chart Industries demonstrates a strong performance in the market. The company's gross profit margin stands at a healthy 31.66%, reflecting efficient operations and solid profitability.
InvestingPro Tips highlight that Chart Industries is trading at a low P/E ratio relative to near-term earnings growth, suggesting potential for an attractive investment. Additionally, analysts expect both net income and sales to grow this year, reinforcing the optimism around the company's financial prospects. For investors seeking deeper analysis, there are 11 additional InvestingPro Tips available, which can be accessed with the promo code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
The company's ability to sustain profitability is further underscored by a strong return over the last week, with a 1 Week Price Total Return of 11.66%. Chart Industries' strategic positioning in the energy and industrial gas markets, coupled with its financial metrics, aligns with the positive outlook projected by BofA Securities.
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