Mizuho lifts Cheniere Energy target to $254 on growth strategy

On Tuesday, Mizuho (NYSE:MFG) Securities raised its price target on Cheniere Energy shares, listed on the New York Stock Exchange (NYSE:LNG), from $248.00 to $254.00. The firm maintained an Outperform rating on the stock. Currently trading at $222.52 with a market capitalization of $49.8 billion, Cheniere has demonstrated strong financial health with an InvestingPro Overall Score of "GREAT." The adjustment follows a detailed update from Cheniere Energy on its fourth-quarter 2024 performance and strategic planning.

Cheniere Energy’s management recently shared insights into their strategy to utilize an aggressive permitting approach for future growth. The strategy aims to provide the company with flexibility to pursue more targeted expansions and enhance the profitability of its projects, building on its impressive revenue of $15.45 billion in the last twelve months. This announcement came after discussions from an investor dinner held in December, where Cheniere’s focus on obtaining permits for the fiscal year 2025 was highlighted. According to InvestingPro analysis, the company shows strong return potential, with analysts maintaining a bullish consensus and price targets ranging from $220 to $303.

The company’s fourth-quarter update further emphasized its intention to secure permits that would enable it to expand its production capacity to over 90 million tonnes per annum (mtpa) over time. Cheniere’s management has indicated that obtaining permits for additional expansions at its Sabine Pass and Corpus Christi facilities would allow the company to grow in a more cost-effective and targeted manner. They also mentioned the potential for small brownfield expansions at both sites.

The rationale behind this strategy is to better manage cost inflation, which has not yet been reflected in an increase in LNG contract rates. The successful acquisition of these permits would position Cheniere Energy to navigate these costs more effectively.

Mizuho’s revised price target of $254 is based on an updated forecast and valuation methodology, taking into account Cheniere’s growth plans and permitting strategy. The securities firm’s analysis suggests confidence in Cheniere Energy’s ability to leverage its permitting strategy for future expansions and to maximize the accretion of its projects.

In other recent news, Cheniere Energy reported strong fourth-quarter earnings, surpassing analyst expectations with adjusted earnings per share of $4.33, compared to the consensus of $2.73. The company’s revenue for the quarter reached $4.44 billion, exceeding estimates of $4.1 billion and marking a 1% year-over-year increase. For the full year 2024, Cheniere generated revenues of $15.7 billion and net income of $3.3 billion, with a Consolidated Adjusted EBITDA of $6.2 billion. Looking ahead, the company introduced 2025 guidance, projecting Consolidated Adjusted EBITDA between $6.5 billion and $7.0 billion, and Distributable Cash Flow between $4.1 billion and $4.6 billion.

In regulatory developments, Cheniere received approval from the Federal Energy Regulatory Commission for the expansion of its Corpus Christi LNG plant, allowing for the construction of production trains 8 and 9. Fitch Ratings upgraded Cheniere Energy and Cheniere Energy Partners (NYSE:CQP) to ’BBB’ from ’BBB-’, citing expectations of leverage falling below 4.0x, supported by stable cash flows from long-term contracts. Stifel raised its price target for Cheniere Energy to $255, maintaining a Buy rating, despite an earnings miss attributed to lower-than-expected revenues.

Meanwhile, Jefferies maintained its Buy rating with a price target of $303, noting that Cheniere’s fourth-quarter EBITDA fell short of estimates due to higher operating expenses. However, the firm expressed confidence in the company’s ability to achieve its 2025 EBITDA and Distributable Cash Flow guidance, highlighting the operational status of the Corpus Christi Liquefaction project’s first train. Investors are expected to focus on the company’s future guidance and project updates as they assess Cheniere’s potential in the evolving energy market.

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