These are top 10 stocks traded on the Robinhood UK platform in July
On Thursday, Stifel analyst Benjamin Nolan reaffirmed a Buy rating on Golar LNG Ltd . (NASDAQ:GLNG), with a steady price target of $55.00. Currently trading at $37.44, the stock has significant upside potential, with analyst targets ranging from $42 to $56. InvestingPro data shows the company has delivered a strong 56% return over the past year. Nolan highlighted the recent completion of a significant refinancing deal for Golar’s Gimi FLNG (OL:FLNG) unit, which is currently engaged in a 20-year contract for the Greater Tortue Ahmeyim (GTA) project with BP (NYSE:BP) and Kosmos Energy (NYSE:KOS).
The new financing arrangement with a Chinese leasing company amounts to $1.2 billion, featuring a 12-year tenor and a 17-year amortization schedule. This deal replaces the previous $670 million construction financing on the asset, resulting in a "cash out" of $530 million. Considering Golar’s 70% stake in the unit, the company’s share of the proceeds is approximately $371 million. According to InvestingPro analysis, Golar operates with a moderate level of debt, maintaining a healthy debt-to-equity ratio of 0.72.
Nolan anticipates that the funds gained from this refinancing will be allocated towards Golar’s growth, particularly in funding the equity component for a second MK2 vessel. The first MK2 (Fuji) is expected to secure a contract soon, which would prompt Golar to exercise their option for a subsequent MK2 project.
The Stifel analyst believes that the current valuation of Golar LNG shares does not account for the potential upside from either of the MK2 vessels. However, as contracts for these projects are established, Nolan expects the company’s equity to experience a positive re-rating. Based on InvestingPro Fair Value analysis, the stock appears overvalued at current levels, though analysts expect net income and sales growth this year. For deeper insights into Golar’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst also noted that the financing terms set a strong precedent for future asset financing, as the debt to EBITDA ratio on the Gimi FLNG unit is about 5.5x based on nameplate capacity. This is considered favorable, especially given Golar’s ability to produce MK2 units at approximately 4.4x EBITDA. The successful refinancing and the prospects for future growth through the MK2 projects continue to underpin Stifel’s positive outlook on Golar LNG.
In other recent news, Golar LNG Limited reported its fourth-quarter 2024 earnings, revealing a revenue of $66 million, which fell short of the anticipated $67.42 million. Despite the revenue miss, the company maintained a steady financial performance with total EBITDA reaching $59 million for the quarter and $241 million for the full year. The company declared a quarterly dividend of $0.25 per share. Golar LNG continues to focus on its core strengths in the FLNG sector, having acquired minority stakes in the Hilli FLNG and secured a 20-year charter with Southern Energy in Argentina. The company is also exploring the potential development of a fourth FLNG unit, signaling continued expansion. Analysts from firms such as Stifel and Deutsche Bank (ETR:DBKGn) engaged with Golar’s management, indicating ongoing interest in the company’s strategic initiatives. Golar’s CEO emphasized their unique position in the FLNG market, highlighting growth ambitions and operational advancements. The company maintains a strong cash position of approximately $700 million, supporting its strategic goals.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.