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On Friday, Scotiabank (TSX:BNS) analyst Brandon Bingham revised the price target for Venture Global (NYSE:VG) shares to $15.00, down from $17.00, while maintaining a Sector Perform rating. The stock, currently trading at $9.10, has fallen nearly 40% in the past week alone and sits near its 52-week low of $8.72, according to InvestingPro data. Bingham expressed concern over the company’s first-quarter performance as a publicly traded entity, citing that the fourth-quarter results of 2024 fell short of both Scotiabank’s and Street’s expectations. With a market capitalization of $22 billion and last twelve months EBITDA of $2.1 billion, the company operates with a significant debt burden of $29.8 billion. Additionally, the forecast for the fiscal year 2025’s EBITDA at $7.1 billion was significantly lower than the anticipated $9.2 billion by Scotiabank and $9.3 billion by Street.
Venture Global’s guidance was more than 20% below Scotiabank’s estimates, which was particularly surprising given that international gas prices, based on TTF/JKM benchmarks, were not more than 20% below the company’s presented figures (approximately $13.70 per Mmbtu). The analyst also noted confusion arising from the company’s introduction of the term "weighted average fixed liquefaction fee" in place of net spreads, although management attempted to clarify that these are essentially interchangeable terms.
The company’s assumptions for these fixed liquefaction fees, which support the FY25 EBITDA guidance of $7-$8 per Mmbtu, were provided, but the process of selling commissioning cargos added to the complexity. Bingham suggests that this quarter serves as a baseline for understanding Venture Global’s business mechanics, but acknowledges that this baseline is much lower than what was previously anticipated. Despite the lowered expectations, Scotiabank reiterated its Sector Perform rating on Venture Global shares. For deeper insights into Venture Global’s financial health and valuation metrics, including 18 additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Venture Global Inc . reported its fourth-quarter 2024 earnings, revealing a substantial revenue decline to $1.5 billion, marking a 737% decrease from the previous year. However, the company saw a significant increase in net income, reaching $871 million. Despite the revenue drop, Venture Global remains optimistic about its future, with ongoing projects and expansions in its LNG production capabilities. Analysts noted that the company’s earnings per share of $0.33 and revenue of $1.52 billion fell below market expectations. Looking forward, Venture Global has set a consolidated adjusted EBITDA guidance of $6.8 to $7.4 billion for 2025, with plans to export between 140 to 148 cargos from its Capshoe Pass facility. The company is also progressing with the Plaquemines Phase III expansion. Additionally, Venture Global’s stock was impacted by the earnings announcement, reflecting investor concerns over the revenue decline. The company continues to focus on its growth strategy, with CEO Mike Sable highlighting the strength of global LNG demand and the company’s competitive advantage in rapid train deployment.
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