Gold prices steady, holding sharp gains in wake of soft U.S. jobs data
On Monday, Guggenheim analysts lowered the price target for Venture Global (NYSE:VG) to $20.00 from the previous $27.00, while maintaining a Buy rating on the stock. The adjustment followed Venture Global’s fourth-quarter 2024 earnings report, which missed consensus estimates, and the company’s 2025 guidance, which was set below consensus expectations. According to InvestingPro data, the company currently trades at $9.23 with a market capitalization of $22.33 billion, significantly below analyst targets ranging from $12 to $25.
The analysts noted that the company’s performance in 2024 suffered due to a weakening merchant commodity market and rising costs. The lower 2025 guidance was primarily attributed to a 27% decrease in the commodity spread from their previous model to current pricing. InvestingPro analysis reveals concerning financial health metrics, with a debt-to-equity ratio of 10.29 and a weak overall financial health score, indicating significant operational challenges. Despite positive developments, such as the ahead-of-schedule pre-commissioning progress at the Plaquemines project and progress toward the Final Investment Decision (FID) for CP2, these were overshadowed by the announced capital cost inflation at Plaquemines.
The broader commodity markets have been responding to the potential easing of supply constraints in the EU, stemming from Ukraine-Russia peace talks. This is in contrast to recent data pointing to continued tightness, including the EU’s decision to maintain gas storage quotas through 2027, historically low storage levels, and the possibility of multinational coordination on long-term purchasing strategies.
On March 6, 2025, Venture Global’s shares experienced a significant drop of 36%, in contrast to a 2% decline in the S&P 500. This was attributed to a lack of liquidity and investor patience with the company’s development ramp-up. During the earnings call, management confirmed that current market curves and near-term commercial contracting terms are still favorable for the returns of development projects, particularly CP2 as it moves toward FID. Management’s long-term view is that demand will outpace supply, which is not currently reflected in forward curves.
In their commentary, Guggenheim analysts acknowledged the negative data points on development costs and risks but have adjusted their model to market conditions in the near term, while leaving long-term assumptions largely unchanged. They reiterated their Buy rating on Venture Global, with a revised price target of $20.00. The company maintains strong operational metrics with EBITDA of $2.085 billion and revenue of $4.972 billion in the last twelve months, though InvestingPro’s Fair Value analysis suggests the stock is currently overvalued despite the recent price decline.
In other recent news, Venture Global reported its fourth-quarter 2024 earnings, revealing a significant revenue decline to $1.5 billion, a decrease of 737% from the previous year. Despite this, the company saw a substantial increase in net income, reaching $871 million. This financial performance has led to adjustments in analyst outlooks, with Guggenheim and Goldman Sachs both reducing their price targets to $20, while maintaining a Buy rating. Scotiabank (TSX:BNS) also revised its price target down to $15, citing concerns over Venture Global’s first-quarter performance as a publicly traded entity and lower-than-expected EBITDA guidance for 2025. The company has been advancing its Plaquemines project ahead of schedule, although it faces challenges with capital cost inflation. Analysts from firms like Guggenheim and Goldman Sachs have noted the progress at Plaquemines and the potential benefits of increased contracting levels. Venture Global’s management remains optimistic about the long-term demand for LNG and is focused on expanding production capabilities with ongoing projects such as the CP2 and Plaquemines Phase III expansion.
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