Jefferies starts Excelerate Energy at Buy on LNG tailwinds and stable cash flow
Investing.com -- Jefferies initiated coverage of Excelerate Energy with a "Buy" rating and a price target of $39, saying the company is well-positioned to benefit from rising global demand for liquefied natural gas (LNG) through its fleet of floating storage and regasification units (FSRUs).
Excelerate operates the world's largest FSRU fleet, with 12 vessels including one under construction, and manages LNG import terminals across 12 countries. Most of its infrastructure is tied to long-term, take-or-pay contracts, providing steady cash flow with minimal exposure to commodity price swings, Jefferies said.
The brokerage noted that four of Excelerate's vessels have recently been re-contracted at higher day rates following the Ukraine war, and it expects more vessels to secure favorable terms once their current contracts expire. Cumulative contracted cash flow stood at around $3.7 billion as of December 2024.
Jefferies also highlighted the company's growth initiatives, including a $1 billion acquisition of LNG-to-power assets in Jamaica, which is expected to add $118 million in annual EBITDA. Additional upside may come from LNG marketing agreements and the startup of Hull 3407, a new FSRU set to launch in mid-2026.
While capital expenditures will rise in 2026 due to Hull 3407, Jefferies forecasts free cash flow to rebound in 2027, potentially reaching $236 million. That could give Excelerate room to raise its dividend by as much as $90 million.
The $39 price target is based on a 7x multiple of projected 2027 EBITDA, which Jefferies said is conservative compared to other LNG peers.
While share liquidity remains a concern, Jefferies expects long-term support from major shareholder George Kaiser.
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