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Investing.com - BTIG downgraded New Fortress Energy (NASDAQ:NFE) from Buy to Neutral on Monday, citing mounting concerns about the company’s debt structure. The company currently carries a substantial debt burden of $9.63 billion, with a concerning debt-to-equity ratio of 5.51.
NFE stock has plummeted approximately 65% since mid-May when the company reported its first-quarter earnings, as investors have increasingly focused on its debt obligations, according to BTIG. The stock is currently trading at $2.28, representing a steep 84.92% decline year-to-date. InvestingPro analysis indicates the stock is currently undervalued, with 12 key insights available to subscribers about NFE’s financial health and prospects.
While New Fortress Energy’s next debt maturity of approximately $510 million is not due until September 2026, the research firm noted that the 2026 bonds are currently trading in the 40s, implying a yield of around 90%. Despite these challenges, the company maintains a current ratio of 1.0 and offers a significant dividend yield of 17.54%.
BTIG explained that covenants on the company’s revolving credit facility and term loans limit buybacks on the 2026 bonds, suggesting a potential solution might involve a debt exchange combined with equity issuance, similar to the fourth quarter of 2024 when NFE exchanged $2.7 billion in debt and raised approximately $400 million in equity.
The research firm expects New Fortress Energy to address its near-term liquidity concerns, but anticipates the balance sheet will remain an overhang on the stock, particularly as the PortoCem project, which could potentially generate $200-300 million in EBITDA, is not scheduled to come online until mid-2026.
In other recent news, New Fortress Energy has faced a series of noteworthy developments. The company has delayed filing its quarterly report for the period ending March 31, 2025, but expects to complete it by June 27, 2025. This delay has resulted in a notification from the Nasdaq Stock Market regarding non-compliance with listing rules, although the company is working on regaining compliance. New Fortress Energy has also completed the sale of its Jamaican business to Excelerate Energy Limited Partnership for $1.055 billion, a move that provides some liquidity. S&P Global Ratings has downgraded New Fortress Energy’s credit rating to ’B-’ from ’B’ due to weak financials, despite the liquidity boost from the asset sale. The company’s financial challenges include limited liquidity and refinancing risks, with an estimated EBITDA of $900 million-$945 million for 2025. Additionally, shareholders recently elected three Class III directors and ratified Ernst & Young LLP as the independent auditor for the fiscal year ending December 31, 2025.
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