Stifel raises NextDecade stock price target to $15 from $13

On Monday, Stifel analysts adjusted their outlook on NextDecade Corp. (NASDAQ: NASDAQ:NEXT) shares, raising the price target from $13.00 to $15.00 while maintaining a Buy rating. The stock, currently trading at $7.26, has shown remarkable momentum with an 86% gain over the past six months. According to InvestingPro data, analyst targets for the stock range between $9 and $13. The revision follows NextDecade’s announcement on Friday regarding expansion plans for the Rio Grande LNG terminal, which include the addition of Trains 6, 7, and 8. This expansion is expected to add approximately 18 million tonnes per annum (mtpa) of extra capacity. However, InvestingPro analysis reveals the company operates with significant debt burden, with a debt-to-equity ratio of 10.77 and a concerning current ratio of 0.69.

The company has begun work on Train 6, with regulatory filings to be submitted early next year. However, the commencement of Train 6 operations is not anticipated until 2031 at the earliest, and the company acknowledges there is considerable work to be done in terms of contracting. Despite a legal challenge for Trains 1-3, Stifel analysts do not foresee a halt in construction due to a more favorable regulatory environment in Washington and ongoing progress by the Federal Energy Regulatory Commission (FERC) on a supplemental Environmental Impact Statement (EIS).

NextDecade’s recent release of their 10K report also sheds light on the company’s financial health and future strategies. Stifel’s commentary suggests that with commercial offtake already accounted for, a final investment decision (FID) on Train 4 is likely to follow soon after regulatory obstacles are overcome this year.

The analysts believe that a number of factors will contribute to driving NextDecade’s stock closer to their discounted cash flow (DCF) valuation. These catalysts include the company’s progress toward meeting regulatory requirements and the potential for securing contracts that would support the additional capacity from the proposed expansion. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels, despite its strong price momentum. InvestingPro subscribers have access to 12 additional key insights about NextDecade’s financial health and growth prospects.

In other recent news, NextDecade Corporation has secured a $175 million loan through its subsidiary, Rio Grande LNG Super Holdings, LLC, from General Atlantic Credit’s Atlantic Park Fund. This loan, finalized at the end of December, is intended to repay existing financial obligations, including a $50 million revolving credit facility and a $12.5 million interest term loan. The remaining funds will be used for working capital and general corporate purposes, with a focus on the development of expansion trains 4 and 5 at the Rio Grande LNG Facility. The loan carries a 12.0% interest rate, which is payable quarterly, and includes an option for interest to be paid in-kind for the first two years, with up to 50% continuing to be paid in-kind thereafter. As part of the deal, NextDecade issued approximately 7.16 million warrants to GA Credit, exercisable at $7.15 and $9.30 per share, valid for five years. Santander (BME:SAN) acted as the exclusive financial advisor, while Latham & Watkins LLP provided legal advice to NextDecade. GA Credit was represented by Akin Gump Strauss Hauer & Feld LLP and Baker Botts L.L.P. These developments are part of NextDecade’s strategy to enhance its LNG and carbon capture projects.

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