Cheniere Energy stock target raised to $250 by TD Cowen

On Monday, TD Cowen maintained a positive outlook on Cheniere Energy (NYSE:LNG), raising the price target from $242.00 to $250.00 while keeping a Buy rating on the stock. Currently trading at $226.52, the stock has shown impressive momentum with a 31.85% return over the past six months. The firm's analysts project a stronger fourth-quarter EBITDA of $1.7 billion, which surpasses the consensus estimate of $1.6 billion. They anticipate that Cheniere Energy will guide its fiscal year 2025 EBITDA to $7 billion, slightly higher than the consensus forecast of $6.8 billion. According to InvestingPro data, the company maintains a "GREAT" overall financial health score of 3.53 out of 5.

Cheniere Energy's ability to leverage high spot market margins will depend on the speed of the Stage 3 ramp-up, according to TD Cowen. The analysts expect the company's organic free cash flow to enable substantial share buybacks, estimating $1.7 billion per year in 2025 and 2026. Supporting this outlook, InvestingPro data shows the company generated $3.1 billion in levered free cash flow over the last twelve months, with a healthy free cash flow yield of 6%. They also suggest that there could be additional upside from excess cash drawdown.

TD Cowen bases its valuation of Cheniere Energy on the net present value (NPV) of its discounted cash flows (DCF) extending to the year 2035, which is considered the terminal year with lower assumed fixed-fee contracts than the current weighted average. The valuation reflects all capacity currently under construction, including mid-scale trains 8 and 9. The revised price target takes into account share repurchases projected through 2030, an extension from the previous estimate which only accounted for repurchases through 2029.

The analysts further elaborate that if Cheniere Energy's stock is evaluated based on a DCF of free cash flow per share, with assumed share repurchases through 2035 based on forecasted excess cash, the stock's value could potentially reach $300 per share. Additionally, the pre-FID Sabine Pass expansion could contribute an extra $18 per share to the valuation. Current trading multiples for Cheniere Energy are 10.3 times, 11.3 times, and 10.5 times its projected EBITDA for 2025, 2026, and 2027, respectively. For deeper insights into Cheniere Energy's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health, valuation metrics, and growth potential.

In other recent news, Cheniere Energy has been making significant strides in its operations and financial performance. The company reported robust earnings and revenue results, with a noteworthy increase in its consolidated adjusted EBITDA to approximately $1.5 billion and distributable cash flow to about $820 million. Additionally, Cheniere Energy announced a stock repurchase of nearly $300 million in Q3 and a debt reduction of $150 million.

TD Cowen, an analyst firm, has recently upgraded Cheniere Energy's stock target to $242, maintaining their Buy rating, due to the company's advantageous position in the global gas market and its potential for upside gains. The firm noted the company's stable cash flow, reducing the need for future capital calls and paving the way for more consistent share buybacks.

Cheniere Energy has also made substantial progress on Stage 3 of the Corpus Christi project, which is currently 68% complete. The company expects the first LNG from Train 1 of the Stage 3 project by year-end, with substantial completion expected in early Q2 2025.

The company has demonstrated its commitment to ethical business practices by updating its Code of Business Conduct and Ethics, which now includes a policy on the use of artificial intelligence and enhanced whistleblower protections.

These are recent developments that provide insight into the company's strategic initiatives and commitment to growth.

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