On Tuesday, Stifel maintained a Buy rating on Golar LNG Ltd . (NASDAQ:GLNG), currently trading at $42.24, and increased the price target to $55 from $53. The stock has shown remarkable strength with an 88.6% gain year-to-date. The adjustment follows Golar LNG's announcement of acquiring the remaining approximately 8% stake in the Hilli floating liquefied natural gas (FLNG (OL:FLNG)) unit from Seatrium and Black and Veatch. The transaction is valued at $90.2 million.
The analyst from Stifel views the acquisition positively, noting that Golar LNG is securing the stake for less than four times the expected earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) based on the fixed EBITDA anticipated after the commencement of the Argentina contract in 2027.
According to InvestingPro data, the company operates with a moderate level of debt and maintains a healthy current ratio of 1.55, indicating strong short-term liquidity. The deal, while modest in size, is seen as beneficial for Golar LNG as it simplifies the company's balance sheet and is expected to improve cash flows.
The acquisition is also considered to be value accretive for Golar LNG. The new price target of $55 per share reflects the valuation of the company's two existing FLNG units and a third one currently under construction. The Stifel analyst believes that the deal enhances Golar LNG's financial metrics and provides a clearer picture of the company's future revenue streams.
The transaction is part of Golar LNG's broader strategy to consolidate ownership and control over its assets. By purchasing the remaining shares of the Hilli, Golar LNG aims to fully benefit from the unit's operational performance and the upcoming Argentina project.
Golar LNG, listed on the NASDAQ, is a leading player in the liquefied natural gas sector, specializing in the transportation, regasification, and liquefaction of LNG. The company's strategic moves, such as the recent acquisition, are closely watched by investors and analysts in the energy market. With a market capitalization of $4.4 billion and analyst consensus strongly favoring a Buy rating, the company shows promising prospects. For deeper insights into Golar LNG's financial health and growth potential, investors can access comprehensive analysis and additional ProTips through InvestingPro's detailed research reports.
In other recent news, Golar LNG has been making significant strides in its operations.
The company had a robust performance in Q3 2024, with an adjusted EBITDA of $59 million on total revenues of $65 million. However, Golar reported a net loss of $35 million due to non-cash adjustments. The company also announced a new order for a third Floating Liquefied Natural Gas (OTC:LNGLF) (FLNG) unit, a Mark II, which is expected to increase Golar's capacity by 70% upon its delivery in Q4 2027.
Stifel maintains its Buy rating on Golar LNG, with a price target of $53 for the company's stock. The firm's analysis suggests that the expansion of the Perito Francisco Pascasio Moreno gas pipeline could provide enough gas to support up to 8.5 million tonnes per annum of additional LNG exports, a significant development for Golar LNG.
Furthermore, Golar LNG is planning to finalize a contract for the Mark II FLNG by 2025 and expects to double its EBITDA backlog to over $20 billion. The company also has plans to refinance Gimi's debt and optimize capital structure for growth. These recent developments indicate the company's strategic focus on expanding its portfolio and maintaining a strong position in the global LNG market.
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