How are energy investors positioned?
On Monday, Northland analysts began coverage of Hallador Energy (NASDAQ:HNRG), assigning the stock an Outperform rating and setting a price target of $23.00. The firm highlighted Hallador Energy’s status as a vertically integrated independent power producer, noting its acquisition of a 1 GW power plant in 2022. The stock, currently trading near its 52-week high of $19.53, has delivered an impressive 216.8% return over the past year. According to InvestingPro data, the company’s market capitalization stands at $826.43 million, though technical indicators suggest the stock may be in overbought territory. According to Northland, a significant driver for the stock could be the company’s ongoing negotiations to secure a long-term contract with a data center for the majority of its capacity.
The analysts at Northland see the expiration of Hallador’s low-priced legacy power contracts in 2025 as a positive development. This change is expected to provide a boost to the company’s financial performance starting in 2026. The $23.00 price target is based on a 7.5x EV/EBITDA multiple, which reflects a roughly 25% discount compared to the company’s independent power producer peers. Current InvestingPro metrics show the company trading at an EV/EBITDA of 10.88x, with moderate debt levels. Get access to 12+ additional ProTips and comprehensive financial analysis with an InvestingPro subscription.
Hallador Energy’s strategic moves, including the recent acquisition and the potential new data center contract, are key elements that Northland believes will catalyze the company’s stock. The analysts’ valuation indicates a bullish outlook for Hallador Energy’s future earnings and market position.
The price target set by Northland represents their confidence in Hallador Energy’s ability to outperform within its sector. The firm’s approach to setting the price target takes into account the company’s discounted valuation relative to its industry counterparts, suggesting room for growth in Hallador’s stock value.
Investors in Hallador Energy will likely watch closely as the company progresses in its contract negotiations and approaches the expiration of its legacy contracts. These developments could potentially confirm Northland’s positive stance on the company’s stock performance. Based on InvestingPro’s Fair Value analysis, the stock currently appears overvalued, though strong momentum has driven significant returns across multiple timeframes. Discover detailed valuation metrics and access the comprehensive Pro Research Report, available for over 1,400 US stocks, to make more informed investment decisions.
In other recent news, Hallador Energy reported its Q1 2025 earnings, significantly exceeding analyst expectations. The company achieved an earnings per share (EPS) of $0.23, outperforming the anticipated loss of $0.13. Revenue also surpassed forecasts, reaching $117.8 million compared to the expected $100.25 million. Hallador Energy reduced its bank debt from $44 million to $23 million, demonstrating improved financial health. The company reported operating cash flow of $38.4 million, up from $32.5 million in Q4 2024, and adjusted EBITDA rose to $19.3 million from $6.2 million in the previous quarter. Additionally, Hallador Energy is exploring natural gas co-firing capabilities and potential acquisitions to enhance its strategic positioning. The company is also in negotiations with a global data center developer regarding long-term energy supply agreements. Analyst firm B. Riley Securities has shown interest in these developments, reflecting positive market sentiment.
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