Stifel maintains Buy on NextDecade stock, $15 target

On Wednesday, Stifel analysts maintained their Buy rating and $15.00 price target for NextDecade Corp. (NASDAQ:NEXT) shares, representing potential upside from the current price of $8.50. The stock has shown strong momentum, gaining over 73% in the past six months. The firm’s positive stance comes after the U.S. Court of Appeals for the D.C. Circuit revised its previous judgment from August 2024. According to InvestingPro data, analyst consensus remains cautiously optimistic with targets ranging from $9 to $15. The court’s decision allows construction to proceed at the Rio Grande LNG terminal while awaiting a supplemental Environmental Impact Statement (EIS) from the Federal Energy Regulatory Commission (FERC), expected later this year.

The court’s revision is seen as a step forward for NextDecade’s Rio Grande LNG project, particularly concerning the development of Train 4. Stifel analysts anticipate that the Final Investment Decision (FID) for Train 4 could be made later in 2025. Once operational, the first four trains of the terminal are estimated to generate over $500 million in EBITDA for NextDecade. This potential EBITDA boost is crucial, as InvestingPro data shows the company currently operates with significant debt of $4.07 billion and negative EBITDA of -$169 million in the last twelve months.

Stifel’s valuation of the Rio Grande LNG project is based on the progress of its various production trains. The first four trains alone have been valued at $11 per share or $18 per share without discount. Additionally, the potential completion of Train 5 is projected to add $6 per share in value, or $9 per share if not discounted. Stifel’s price target incorporates a 100% probability of Train 4 proceeding, a 50% likelihood for Train 5, and a 25% chance for Train 6.

The continuation of construction while regulatory processes are underway is a significant development for NextDecade. The company’s ability to push forward with the project could pave the way for substantial growth in EBITDA following the completion of the additional trains. The Rio Grande LNG terminal is a pivotal asset for NextDecade, and the latest court revision appears to support the company’s timeline for expanding its production capabilities. InvestingPro analysis indicates the company maintains a "Fair" overall financial health score, though it faces challenges with cash burn and high debt levels. Subscribers can access 13 additional ProTips and comprehensive financial metrics to better evaluate the company’s investment potential.

In other recent news, NextDecade Corporation has secured a $175 million senior secured loan through its subsidiary Rio Grande LNG Super Holdings, LLC, from General Atlantic Credit’s Atlantic Park Fund. The loan, finalized on December 31, is intended to repay existing financial obligations and support the development of expansion trains 4 and 5 at the Rio Grande LNG Facility. The interest rate on this loan is 12.0%, with interest payments structured to allow partial in-kind payments for the first two years. Alongside this financial development, NextDecade issued approximately 7.16 million warrants to GA Credit, exercisable at specified share prices over the next five years.

Furthermore, Stifel analysts have raised their price target for NextDecade’s stock from $13 to $15, maintaining a Buy rating. This adjustment follows the company’s announcement of expansion plans for the Rio Grande LNG terminal, which includes adding Trains 6, 7, and 8 to increase capacity by approximately 18 million tonnes per annum. Despite legal challenges for Trains 1-3, Stifel remains optimistic due to a favorable regulatory environment and progress by the Federal Energy Regulatory Commission. The analysts anticipate that a final investment decision on Train 4 is likely after regulatory hurdles are cleared this year.

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