Tuesday, Redburn-Atlantic initiated coverage on Cheniere Energy (NYSE:LNG) stock, the leading U.S. liquefied natural gas (LNG) exporter, with a Neutral rating and a price target of $162. The firm cited the company's significant growth prospects due to the upcoming ramp-up of Corpus Christi Stage 3, which is expected to increase EBITDA by approximately 20% over the next two years.
This growth is bolstered by Cheniere's extensive contract coverage, which is anticipated to shield the company from a potential LNG surplus in 2027-28 and provide strong visibility on future cash flows.
The firm acknowledged the positive aspects of Cheniere Energy's business, including its status as the top LNG exporter in the U.S. and the protective measures it has in place against market fluctuations. The analyst pointed out that despite a year-to-date underperformance, the company's valuation appears fair when considering the near-term growth already anticipated by consensus expectations.
The price target of $162 set by Redburn-Atlantic reflects the firm's assessment of Cheniere Energy's current market position and future prospects. The target is based on the anticipated benefits from the Corpus Christi Stage 3 project and the company's robust contract coverage, which collectively contribute to the analyst's outlook on the stock.
Cheniere Energy's financial outlook is strengthened by its contract coverage, which is expected to mitigate the risks associated with a potential oversupply in the LNG market in the latter part of this decade. This coverage is a key factor in the company's ability to maintain stable cash flows going forward.
In summary, Redburn-Atlantic's initiation of coverage on Cheniere Energy with a Neutral rating reflects a balance between the company's growth potential and the current market expectations. The $162 price target underscores the firm's view of the company's financial prospects and market valuation.
InvestingPro Insights
Cheniere Energy's (NYSE:LNG) recent financial performance and market valuation can be further understood through key metrics provided by InvestingPro. With a market capitalization of $35.62 billion and an attractive P/E ratio of 3.76, the company stands out in its sector. The adjusted P/E ratio for the last twelve months as of Q4 2023 is even lower at 3.67, suggesting a potentially undervalued stock relative to earnings.
InvestingPro Tips highlight that Cheniere Energy has consistently raised its dividend for three consecutive years, with a current dividend yield of 1.11%. This, coupled with the company's low price volatility, offers investors a relatively stable income stream. Furthermore, it's worth noting that analysts predict profitability for Cheniere Energy this year, and the company has been profitable over the last twelve months. These factors, along with a strong return over the last five years, provide a solid foundation for investors considering the stock.
For those interested in deeper analysis and additional insights, there are more InvestingPro Tips available for Cheniere Energy at https://www.investing.com/pro/LNG. 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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