Cheniere Energy: World-Class Infrastructure Company with Strong Cash Flow Stability

JP Morgan's Jeremy Tonet raised their price target on Cheniere Energy (NYSE: LNG) by 0.5% from $213 to $214 on May 17, 2024. The analyst maintained their Strong Buy rating on the stock.

According to Tonet, Cheniere Energy's recent underperformance has presented an attractive opportunity for investors. Tonet described Cheniere as a "world-class energy infrastructure company with industry-leading cash flow stability, leverage to secular liquified natural gas tailwinds, and underappreciated optimization capabilities." The analyst believes that the company's first-quarter 2024 results, which exceeded expectations and included $1.2 billion in buybacks, position Cheniere to surpass its initial capital allocation goals and exceed the midpoint of its 2024 guidance range.

Tonet emphasized that the current trading levels of Cheniere Energy are "too inexpensive to ignore." The analyst's positive outlook is supported by the fact that all top-rated analysts currently rate LNG as a Strong Buy or Buy, with no analysts recommending selling the stock.

Taking a closer look at Cheniere Energy's first-quarter 2024 results, the company reported earnings per share (EPS) of $2.13, missing the Zacks Consensus Estimate of $2.30 by 69.1% and significantly lower than Q1 2023's $6.89. However, revenue of $4.3 billion exceeded the Zacks Consensus Estimate of $4 billion, although it was 41.8% lower than Q1 2023's $7.1 billion. Adjusted EBITDA for the quarter was $1.8 billion, down 50.7% year-over-year. Cheniere Energy also reported distributable cash flow (DCF) of $1.16 billion.

Looking ahead, Cheniere Energy management has provided guidance for fiscal year 2024. They expect adjusted EBITDA to be in the range of $5.5 billion to $6 billion, and DCF to be between $2.9 billion and $3.4 billion. President and CEO Jack Fusco expressed confidence in delivering these financial targets, highlighting the company's focus on operational excellence, construction, and project development initiatives. Fusco also mentioned the advantage of Cheniere Energy's leading track record as they pursue LNG capacity expansions at both Sabine Pass and Corpus Christi, aiming to provide customers with energy security, reliability, and environmental benefits.

Since Cheniere Energy's latest quarterly report on May 3, 2024, the stock price has increased by 1.7%. On a year-over-year basis, the stock has risen by 12.5%. However, during this period, Cheniere Energy's performance has trailed behind the S&P 500, which has experienced a 27.5% increase.

Jeremy Tonet, the JP Morgan analyst behind the recent rating and price target update, is ranked in the top 18% of Wall Street analysts by WallStreetZen. With an average return of 4.6% and a win rate of 58.8%, Tonet specializes in the Utilities and Technology sectors, among others.

Cheniere Energy, Inc. is an energy infrastructure company based in Houston, Texas. The company is primarily engaged in liquefied natural gas (LNG) related businesses in the United States. Cheniere owns and operates the Sabine Pass LNG terminal in Louisiana and the Corpus Christi LNG terminal in Texas. Additionally, the company operates the Creole Trail pipeline, which connects the Sabine Pass LNG terminal with various interstate pipelines, and the Corpus Christi pipeline, which interconnects the Corpus Christi LNG terminal with interstate and intrastate natural gas pipelines. Cheniere Energy is also involved in LNG and natural gas marketing.

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