On Wednesday, JMP Securities initiated coverage on FTAI Infrastructure (NASDAQ: FIP) with a Market Outperform rating and a set price target of $11.00. The firm highlighted the company's familiarity with the business, noting its history with FTAI Aviation from which FIP was spun out in August 2022.
The analyst pointed out that FTAI Infrastructure, having traded publicly for almost two years, has faced challenges due to the time required for its infrastructure assets to mature. These assets' long-tailed and long-duration nature has been a drag on earnings in the recent past.
Despite the initial growing pains, the firm expressed optimism for FIP's future. The portfolio is seen as reaching a critical turning point, with expectations for several assets to mature in the year 2024 and beyond. This maturation is anticipated to positively influence earnings and the balance sheet, which could, in turn, enhance FIP's valuation and stock performance over time.
JMP Securities' outlook is based on the maturation of FIP's infrastructure assets, which are expected to reach optimized levels of activity throughout 2024 and into 2025. This progression is seen as a key driver for the company's earnings trajectory.
The initiation of coverage and the establishment of the price target reflect a confidence in FTAI Infrastructure's potential for growth and improvement in financial performance as its portfolio assets evolve and contribute more significantly to the company's bottom line.
In other recent news, FTAI Infrastructure's Q1 2024 adjusted EBITDA report showed $27.2 million, falling short of the $38.8 million estimate due to unforeseen refinery outage at Jefferson Terminal. Despite this, the company announced new initiatives and an improved forward outlook, which include a capital structure action at Jefferson Terminal and new commercial opportunities at Transtar. These developments are expected to add approximately $3.40+ in value per share and contribute around $20 million in incremental EBITDA.
FTAI Infrastructure also reported a 24% increase in adjusted EBITDA to $37.2 million for Q1 2024, fueled by strong results from its subsidiary Transtar and consistent operations at Long Ridge. The company is optimistic about the future, projecting a run rate EBITDA exceeding $200 million for the year and announcing a quarterly dividend of $0.03 per share.
Compass Point, in its analysis, adjusted its outlook for FTAI Infrastructure shares, increasing the price target to $11 from the previous $7 while maintaining a Buy rating. This revision follows FTAI Infrastructure's recent financial performance and the company's new initiatives. Jefferson Terminal has been experiencing record throughput volumes and is anticipated to report record results for Q2 2024.
InvestingPro Insights
As FTAI Infrastructure (NASDAQ: FIP) approaches a pivotal moment, with JMP Securities initiating coverage and projecting a positive outlook for the company's maturation phase, insights from InvestingPro add a layer of depth to the analysis. The company's market capitalization stands at a solid $843.04M, underscoring its substantial presence in the sector. Despite a challenging earnings history, with a P/E ratio currently at -4.45 and adjusted to -5.52 for the last twelve months as of Q1 2024, the company's revenue growth paints a brighter picture. The revenue has grown by 11.7% over the last twelve months as of Q1 2024, with a quarterly growth of 7.9% in Q1 2024.
InvestingPro Tips highlight critical considerations for investors: FIP operates with a significant debt burden and may have trouble making interest payments on its debt, which is a risk factor to be mindful of. However, the expectation of net income growth this year and analysts' anticipation of sales growth in the current year provide a counterbalance to these concerns. For those interested in deeper analysis, InvestingPro offers additional tips on FIP. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
With a notable return of 151.72% over the past year, FIP has demonstrated the potential for strong performance. As the company's infrastructure assets are expected to mature, investors will be watching closely to see if these assets will indeed translate into the anticipated earnings and balance sheet improvements. For a more comprehensive understanding of FTAI Infrastructure's prospects and to explore the full list of 12 additional InvestingPro Tips, interested parties are encouraged to visit InvestingPro.
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