On Monday, Stifel, a financial services firm, updated its outlook on New Fortress Energy (NASDAQ: NASDAQ:NFE), raising the stock's price target to $17.00, up from the previous $16.00, while reiterating a Buy rating. According to InvestingPro data, analyst targets for NFE range from $11 to $35, with the stock currently trading near $12. This adjustment comes after a thorough review of the company's operations in Jamaica and Puerto Rico.
The analyst's assessment followed a personal tour of New Fortress Energy's facilities, which provided deeper insights into the company's financial health and operational progress.
Despite facing challenges such as project delays and the termination of a FEMA contract that led to a stretched balance sheet (with total debt of $8.6 billion and a concerning current ratio of 0.38) and a costly recapitalization, the analyst observed positive developments that support a brighter outlook for the energy firm. InvestingPro subscribers can access 11 additional key insights about NFE's financial health.
New Fortress Energy is expected to potentially sell its Jamaica operations for over $1 billion, a move that would significantly reduce its leverage and capital costs. Additionally, the growth prospects in Puerto Rico are seen to be gaining momentum, which could lead to a substantial increase in cash flows with minimal capital investment required in the coming years.
The analyst's projections are optimistic, anticipating that New Fortress Energy could achieve approximately $2 billion in EBITDA by 2027. This would represent a three to fourfold increase from the current levels, signaling a strong potential upside for the company's financial performance.
In other recent news, New Fortress Energy has finalized a significant $1.5 billion debt exchange as part of its efforts to optimize its balance sheet.
This move is the final phase of a larger $2.7 billion new senior secured notes issuance due in 2029. In addition to this, the energy company has seen its stock rating upgraded from Sell to Hold by Deutsche Bank (ETR:DBKGn), due to improved liquidity and extended debt maturities. This upgrade follows a $400 million equity issuance and a significant debt refinancing deal.
Furthermore, New Fortress Energy has initiated a process to issue debentures not exceeding R$4.5 billion through its indirect subsidiary, PortoCem Geração de Energia S.A. These funds are intended for reimbursing expenses, debt, and funding remaining construction costs for the PortoCem Power Plant in Brazil.
In its Q3 2024 earnings call, the company reported an adjusted EBITDA of $176 million, aligning with prior forecasts. Despite a modest reduction in Q4 guidance due to maintenance in FLNG (OL:FLNG) operations, 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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