We are launching coverage of Cheniere Energy Inc. (LNG) with a “Buy” rating and a $255 target price. As the first domestic energy company to be approved for LNG exports, Cheniere is well positioned for earnings growth over the next several years, highlights John Staszak, analyst at Argus Research.
The company’s long-term contracts (some last decades) provide visibility and stability. Cheniere Energy is also shareholder friendly; it raised its dividend by 15% in late-October last year and bought back 13.8 million of its shares in 2024.
Cheniere Energy Inc. (LNG)
On Feb. 20, Cheniere Energy also reported fourth-quarter revenue of approximately $4.44 billion, above the consensus estimate of $4.37 billion but down 8% from the same period a year earlier. Consolidated adjusted EBITDA came to $1.57 billion in 4Q24, down 440 basis points from the same period a year ago. The decrease was driven by moderating international gas prices and a higher share of less profitable long-term LNG contracts during the quarter.
In 4Q24, costs and expenses rose nearly 13% to $2.7 billion. The company reported 4Q24 operating earnings of $2.54 per share, up from $2.04 in the same period a year earlier and below the consensus estimate of $3.20. The higher earnings reflected a record number of cargoes (ships containing LNG) in 2024.
Cheniere Energy is likely to benefit from growth in global LNG demand, which is expected to increase almost 100% over the next 15 years, with four-fifths of the increase occurring in Asia. The company’s emphasis on expanding its liquefaction production at Sabine Pass and Corpus Christi enables it to meet the growing demand for clean-burning fuel, bolstering long-term revenue prospects.
For 2025, our per-share earnings estimate is $12.50, rising to $13.30 in 2026. Our long-term growth rate estimate is 15%.
Recommended Action: Buy LNG.
