On Wednesday, Citi reaffirmed its Neutral rating on LandBridge (NYSE: LB), with a steady price target of $34.00. The financial institution's forecast for LandBridge's third-quarter EBITDA is $28 million, aligning with the average Wall Street prediction. The anticipated growth in produced water is projected to contribute to an increase in EBITDA sequentially.
The upcoming earnings report is expected to include announcements about LandBridge's first dividend and forward-looking guidance. Citi predicts that the company will initiate a quarterly dividend of $0.10 per share in the fourth quarter of 2024, which echoes the management's previous statements during the last earnings call. Additionally, the company is likely to provide guidance for the remainder of 2024 and an initial outlook for 2025.
In other recent news, LandBridge Company LLC has seen significant developments. The firm has revised its foundational business agreement, altering the structure of its internal financial dealings. The change stipulates new conditions for settling redemptions and call rights if a member with redemption rights and its affiliates hold at least 40% of LandBridge Company's voting power. Additionally, LandBridge has appointed Andrea Nicolás to its Board of Directors, adding her extensive legal experience and capital markets expertise to the team.
On the financial front, LandBridge's recent second-quarter results have prompted several financial firms to revise their evaluations. Citi has increased its valuation of LandBridge, setting a new price target of $34, following the company's impressive water volumes that exceeded expectations by over 40%. Consequently, Citi also raised its EBITDA forecasts for LandBridge by approximately 3% on average for the years 2024 through 2028.
Other firms including Piper Sandler, Goldman Sachs, and Wells Fargo have also revised their price targets for LandBridge to $39, $36, and $34 respectively. Barclays projected a 36% increase in EBITDA in 2025 and a 12% increase in 2026 for LandBridge, partly driven by planned acquisitions in 2024.
However, potential risks were also noted, including execution risks associated with future acquisitions and potential conflicts of interest involving LandBridge, its affiliate WaterBridge, and the sponsor Five Point.
InvestingPro Insights
LandBridge (NYSE: LB) has been showing strong market performance, as evidenced by recent InvestingPro data. The company's stock has seen remarkable growth, with a 97.75% price total return over the past year, and is currently trading near its 52-week high at 99.37% of that peak. This aligns with the InvestingPro Tip highlighting LB's "Strong return over the last three months."
Despite these positive indicators, it's important to note that LandBridge is not currently profitable, with an adjusted operating income of -$13.19 million over the last twelve months. However, an InvestingPro Tip suggests that analysts predict the company will be profitable this year, which could be a significant turning point for investors.
As Citi discusses the potential for LandBridge's first dividend announcement, it's worth noting that an InvestingPro Tip indicates the company does not currently pay a dividend to shareholders. This makes the upcoming earnings report particularly crucial for income-seeking investors.
For readers interested in a more comprehensive analysis, InvestingPro offers 11 additional tips for LandBridge, providing a deeper understanding of the company's financial position and market outlook.
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