Analyst ratings for Cheniere Energy
In this article, we’ll look at what Wall Street analysts recommend for Cheniere Energy (LNG). On a broader level, 72.7% of analysts rate Cheniere Energy a “buy,” 18.2% rate it as “hold,” and the remaining 9.1% rate it as “sell.”
The median broker target price of $49.00 for Cheniere Energy implies a 17.3% price return in the next 12 months from its August 9, 2016 closing price of $42.20. LNG’S subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners LP Holdings (CQH) have “buy” ratings from 66.7% of analysts surveyed by Bloomberg.
Outlook for Cheniere Energy
Investors can consider the following positives and negatives before they decide to include LNG as a long-term investment.
- First mover advantage. According to Jack Fusco, Cheniere Energy’s CEO, “Many companies talk about developing an LNG export project, but Cheniere is the only company to have delivered an LNG export project on time and on budget in the Lower 48. We have the proven track record across all elements of project execution and finance.” Kinder Morgan (KMI) and Energy Transfer Equity (ETE) have yet to take the Final Investment Decision on the LNG export projects.
- 87% capacity for seven trains sold under long-term SPAs (sale and purchase agreements)
- Addition of new LNG import markets
- Highly leveraged. The situation is not expected to improve in the next few years due to low internally generated cash flows.
- Decline in LNG demand from major Asian LNG markets such as Japan and South Korea.
- Global LNG spot prices might stay low in the coming years due to the supply glut. This impacts Cheniere Energy’s uncontracted LNG capacity.
Looking at the above negatives and positives, Cheniere Energy might be an attractive investment option for investors with a very long-term investment horizon. For more such post-earnings analyses on master limited partnerships, you can refer to our Master Limited Partnerships page.