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On Wednesday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target for XPLR Infrastructure (NYSE:XIFR) shares, reducing it to $12.00 from the previous $15.00, while still maintaining a Buy rating on the stock. Currently trading at $8.81, with a market capitalization of $824 million, XPLR Infrastructure’s valuation metrics show an EV/EBITDA multiple of 18.3x. According to InvestingPro data, the company generated $735 million in EBITDA last year. Dumoulin-Smith revised the forecast due to an anticipated increase of approximately $140 million in interest expenses stemming from new or refinanced debt. This adjustment is expected to decrease the company’s 2026 Cash Available for Distribution (CAFD) estimates by 10%.
The analyst expressed that the lack of EBITDA growth through 2026 is a letdown. The market’s reaction has been severe, with the stock declining 50.5% year-to-date and 63.9% over the past year. However, he believes the market’s reaction to XPLR Infrastructure’s fourth-quarter performance was excessive and does not accurately reflect the company’s true value. Despite the recent sell-off in XPLR Infrastructure’s shares following the fourth-quarter results, Dumoulin-Smith argues that the decline does not fully capture the underlying value of the company, which maintains a solid 14.1% revenue growth rate.
He also pointed out the continued strong market interest in acquiring renewable energy portfolios, despite the current uncertainties surrounding the Inflation Reduction Act (IRA). The analyst suggests that XPLR Infrastructure’s stock has the potential for upside once issues with Clean Energy Production Facilities (CEPFs) are resolved.
Dumoulin-Smith’s revised discounted cash flow (DCF) analysis now implies a $12 per share value, which represents a 36% upside from the current levels. The reassessment comes after considering the increased interest expenses that will affect the company’s future financial performance.
In summary, while acknowledging the disappointing stagnation in EBITDA growth, Jefferies maintains a positive outlook on XPLR Infrastructure’s shares, anticipating a rebound as the company navigates its debt situation and the broader market for renewable energy assets remains robust. The stock currently offers a significant dividend yield of 41.7%, with analyst price targets ranging from $7 to $22. For deeper insights into XPLR Infrastructure’s financial health and growth prospects, including exclusive ProTips and comprehensive valuation metrics, investors can access the detailed Pro Research Report available on InvestingPro.
In other recent news, XPLR Infrastructure LP reported its fourth-quarter 2024 earnings, revealing a notable miss on earnings per share (EPS) expectations. The company posted an EPS of -$1.08, significantly below the forecasted $0.71. However, revenue slightly exceeded expectations, coming in at $294 million against a forecast of $288.59 million. In terms of corporate changes, XPLR Infrastructure announced key leadership transitions, including the retirement of Rebecca Kujawa from the Board of Directors and the resignation of Controller James M. May, who is moving to a new role at NextEra Energy (NYSE:NEE). William J. Gough will succeed Mr. May as Controller, and Michael H. Dunne will replace Ms. Kujawa on the Board. These changes are part of the company’s strategic repositioning efforts. Additionally, XPLR Infrastructure highlighted its focus on strategic investments and long-term growth opportunities in renewable energy, including wind repowering projects and battery storage. The company plans to maintain its adjusted EBITDA for 2025 and has outlined guidance for 2026, expecting it to be between $1.75 billion and $1.95 billion.
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