Market Overview

Improving LNG Export Economics Fetch Cheniere Energy An Upgrade From Morgan Stanley

Share:
Improving LNG Export Economics Fetch Cheniere Energy An Upgrade From Morgan Stanley
Related LNG
Benzinga's Top Upgrades, Downgrades For January 3, 2019
Earnings Scheduled For November 8, 2018

With oil prices approaching multiyear highs, one Morgan Stanley analyst upgraded Cheniere Energy, Inc. (NYSE: LNG) Wednesday. 

The Analyst

Analyst Fotis Giannakoulis upgraded Cheniere Energy from Equal-weight to Overweight and upped the price target from $63 to $80.

The Thesis

Cheniere is poised to take advantage of its leading position and continue growing in small increments, taking advantage of rising global LNG demand and structural natural gas oversupply leading to lower feed gas prices, both of which suggest improving LNG export economics, Giannakoulis said in the upgrade note. (See his track record here.)

Morgan Stanley lowered its long-term Henry Hub natural gas price forecast to $2.50 per MMBtu.

The analyst said he expects the company to benefit from a lack of liquefaction capacity growth after 2020-21.

These factors together will result in margin expansion and capacity growth, Giannakoulis said. Cheniere will continue to add capacity, taking advantage of its solid operational platform as well as its ability to grow in small increments, he said. 

The trade standoff between the U.S. and China is likely to benefit established producers like Cheniere by creating barriers to entry for competition, the analyst said. 

Cheniere is in a position to guarantee the delivery of the contracted volume to its customers as opposed to competing greenfield producers that are seeking to reach final investment decisions on their projects, Giannakoulis said. This means Cheniere is more likely to sign new offtake agreements, he said.

The Price Action

Cheniere Energy shares have gained 27 percent year-to-date.

Related Links:

BMO Downgrades Antero Resources Following LNG Price Rally

The Week Ahead: Nike Earnings, FDA Debates E-Cig Industry, SurveyMonkey IPOs

Latest Ratings for LNG

DateFirmActionFromTo
Jan 2019UBSInitiates Coverage OnBuy
Dec 2018GuggenheimAssumesBuy
Nov 2018CitigroupMaintainsBuyBuy

View More Analyst Ratings for LNG
View the Latest Analyst Ratings

Posted-In: Fotis Giannakoulis Morgan StanleyAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (LNG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
CABOKeyBancUpgrades1,025.0
PANWBMO CapitalUpgrades240.0
UAAGoldman SachsUpgrades28.0
FDCBarclaysDowngrades23.0
GPSGoldman SachsDowngrades0.0
View the Latest Analytics Ratings
Don't Miss Out!
Join Our Newsletter
Subscribe to:
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
Your weekly roundup of hot topics in the exciting world of fintech.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Top 12 Cannabis Stocks By Market Cap One-Year Stock Price Performance

10 Biggest Price Target Changes For Wednesday