Most Analysts Recommend ‘Buys’ on Cheniere Energy

Analysts’ ratings for Cheniere Energy

In this article, we’ll look at what Wall Street analysts recommend for Cheniere Energy (LNG). At a broader level, 85.0% of analysts rated Cheniere Energy as a “buy,” and the remaining 15.0% rated it as a “hold.”

Wells Fargo recently initiated coverage on Cheniere Energy, assigning it an “outperform” rating, which is equivalent to a “buy.”

Most Analysts Recommend ‘Buys’ on Cheniere Energy

The average target price of $53.3 for Cheniere Energy implies an 11.0% price return in the next 12 months from its March 1, 2017, closing price of $48.0. Cheniere Energy’s subsidiaries, Cheniere Energy Partners (CQP) and Cheniere Energy Partners Holdings (CQH), have “buy” ratings from 71.4% and 80% of the analysts surveyed by Reuters, respectively.

Outlook for Cheniere Energy

Investors can consider the following positives and negatives before they decide to include LNG as a long-term investment:

Positives

  • first-mover advantage
  • 87% capacity for seven trains sold under long-term SPAs (sales and purchase agreement), resulting in a stable cash flow stream
  • addition of new liquefied natural gas (or LNG) import markets
  • slight recovery in Global LNG demand, driving LNG prices

Negatives

  • high leverage, which isn’t expected to improve in the next few years due to low internally generated cash flows
  • fall in LNG demand from some major Asian LNG markets, including Japan

Looking at the above negatives and positives, Cheniere Energy may be an attractive investment option for investors with long-term investment horizons.

For more post earnings analyses on MLPs, you can read Market Realist’s Master Limited Partnerships page.