On Tuesday, Golar LNG Ltd . (NASDAQ:GLNG) received a positive update from BTIG, as the firm raised the price target on the company's stock to $45.00, up from the previous target of $36.00. The firm maintained its Buy rating on the shares. The upgrade comes amid signs of steady progress in the company's operations, particularly regarding the re-contracting of its Hilli floating liquefied natural gas (FLNG (OL:FLNG)) unit and the final investment decision (FID) on its first Mark II FLNG.
Golar LNG has been making headlines recently with its strategic advancements. Last week, the company's current charterer for the Hilli, Perenco, through its investment affiliate Naria, acquired a significant ownership stake in Golar LNG, suggesting a long-term strategic partnership. This move is seen as an alignment with Golar LNG's integrated approach, which includes joint ownership of projects and gas reserves.
The analyst noted that Golar LNG is currently in negotiations for an FLNG contract that could last up to 20 years, with potential for the Hilli's extension in Cameroon. The re-contracting of the Hilli is anticipated to unlock substantial value for the company, estimated at $10 per share. Golar LNG has indicated that each FLNG unit could contribute approximately $15-$20 to the company's share value, with the financial terms of contracts for the Hilli and the upcoming Mark II influencing the final amount.
The company has already initiated long-lead times for the first Mark II FLNG in 2022, with expectations that this unit will be operational in the second half of 2027. This step is also paving the way for the ordering of components for a second Mark II unit, which could be launched in 2028. The analyst underscored the potential for significant stock upside as Golar LNG continues to secure multiyear cash flow streams through these projects.
Despite Golar LNG's stock already climbing approximately 30% year-to-date, BTIG foresees further growth potential. The firm's outlook is buoyed by the company's strategic moves to solidify its cash flow through the Hilli and the first Mark II FLNG units.
In other recent news, Golar LNG Ltd. has been the focus of considerable attention from Stifel, with the firm raising its price target for the company from $34.00 to $55.00. This adjustment is linked to the expected acquisition of multiple new contracts for projects such as Hilli and Mk II, which are anticipated to substantially boost the company's revenue through 2027. Stifel's confidence in these developments is further reinforced by energy company Perenco's acquisition of a 10% stake in Golar LNG.
Golar LNG also reported robust financial results for Q1 2024, with operating revenues of $65 million, net income of $66 million, and an adjusted EBITDA of $64 million. In addition, the company reinstated dividends and a share buyback program, demonstrating its commitment to shareholder returns.
The company is making strides in its floating liquefied natural gas (FLNG) operations, with plans to expand its fleet and advanced negotiations for the Mark II FLNG project. Other developments include the planned separation of Macaw Energies into a standalone entity in 2024. Golar LNG's strong liquidity position, with $700 million in cash and $550 million in net debt, supports these strategic initiatives. The company anticipates an additional $150 million EBITDA from the Gimi charter with BP (NYSE:BP).
InvestingPro Insights
InvestingPro data provides a comprehensive look at Golar LNG Ltd. (NASDAQ:GLNG), highlighting a market capitalization of approximately $3.17 billion USD, with a P/E ratio of 28.58, reflecting investor sentiment on its earnings capacity. The company's revenue growth over the last twelve months stands at 7.68%, showcasing its ability to increase sales. Additionally, the operating income margin of 40.6% indicates a strong ability to convert revenue into operating income.
Two notable InvestingPro Tips for Golar LNG suggest a mixed outlook. Firstly, management's aggressive share buybacks indicate confidence in the company's value, which may align with the positive sentiment from BTIG's price target increase. Secondly, the company's net income is expected to grow this year, supporting the potential for increased shareholder value. However, it's important to note that three analysts have revised their earnings expectations downwards for the upcoming period, which could signal caution.
For readers looking to delve deeper into Golar LNG's financial health and future prospects, InvestingPro offers additional insights and metrics. There are currently 16 more InvestingPro Tips available, which can be accessed through the platform. To enhance your investment research, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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