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Analysts’ Views on Cheniere Energy Ahead of 3Q16 Results

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Analysts’ ratings for Cheniere Energy

In this article, we’ll look at what Wall Street analysts recommend for Cheniere Energy (LNG) ahead of its 3Q16 earnings announcement. 72.7% of analysts rate Cheniere Energy a “buy,” 18.2% rate it a “hold,” and the remaining 9.1% rate it a “sell.”

The median broker target price of $52.50 for Cheniere Energy implies a 33% price return in the next 12 months, based on its closing price of $39.50 on October 27, 2016. Cheniere’s subsidiary, Cheniere Energy Partners (CQP), has “buy” ratings from 75% of analysts surveyed by Bloomberg.

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Outlook for Cheniere Energy

There are several positives and negatives investors should consider before they decide to include Cheniere as a long-term investment.

Positives

  • Cheniere Energy has first-mover advantage. According to Cheniere Energy CEO Jack Fusco, “Many companies talk about developing an LNG[1. liquefied natural gas] export project, but Cheniere is the only company to have deliver 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) are yet to make a final investment decision on LNG export projects.
  • Cheniere has 87% capacity for seven trains sold under long-term SPAs (sale and purchase agreements).
  • New LNG import markets are being added.

Negatives

  • Cheniere is highly leveraged. The situation is not expected to improve in the next few years due to low internally generated cash flow.
  • LNG demand from major Asian LNG markets such as Japan and South Korea is low.

For more pre-earnings announcement series on MLPs, you can refer to our Master Limited Partnerships page.

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