Yesterday was a pretty quiet day for the markets, with only a handful of companies making any big moves. One such stock is New Fortress Energy (NASDAQ: NFE), whose shares surged after reporting its fourth-quarter financial results. Despite somehow missing both its revenue and earnings targets, the company was upgraded by Wall Street analysts that still had an optimistic appraisal of the company.
New Fortress reported Q4 revenues of around $145.7 million, which missed Wall Street’s target by a sizeable $20.1 million. At the same time, New Fortress barely broke even this quarter, reporting a GAAP EPS of just $0.00. Once again, Wall Street was expecting a bit better from the company, although the $0.04 EPS target isn’t that much different from the $0.00 reported by the New Fortress.
Despite this, analysts over at Stifel’s remained incredibly optimistic about New Fortress Energy. The company is planning to set up new production platforms in the Caribbean which could generate gas at extremely low production costs. Additionally, according to the management team, new projects in Brazil, Mexico, and Ireland are all gaining momentum.
“Execution risk is still a challenge, but with a number of catalysts now squarely on the horizon and with shares down from previous highs, we believe the value proposition is again compelling,” said Stifel’s analyst Ben Nolan in a note on Tuesday. He added that with a new gas production platform being launched that’s expected to reduce costs, this would lock “in gas margins we in excess of historic levels.” Nolan also mentioned that he thinks that Brazil might be one of the best gas markets in the world, and New Fortress’s Brazilian projects could hit a home run there.
Shares of New Fortress Energy were up around 27.4% on the day, one of the biggest movers on what was otherwise a relatively quiet day. Over the past 12 months, New Fortress has done reasonably well for itself, more than doubling in value over the past year. Most energy stocks have been doing pretty well recently as well, thanks to higher oil prices, although some gas producers have exceeded expectations as well.
Right now, crude oil prices are sitting around $65.2 per barrel, an incredibly high price considering that many traders questioned whether $40 would be possible by 2021. Most of this is because of extensive supply cut commitments from OPEC. While gas is a byproduct of drilling for crude oil, the positive correlation between gas prices and oil prices isn’t as strong as you might expect. According to some sources, oil prices have a 0.5 correlation with gas prices, while other sources claim that the exactly statistical correlation is much lower, such as 0.1 or less.
New Fortress Energy Company Profile
New Fortress Energy Inc is an integrated gas-to-power company. The company is mainly engaged in providing modern infrastructure solutions to create a cleaner, reliable energy while generating a positive economic impact. Its business model spans the entire production and delivery chain from natural gas procurement and liquefaction to logistics, shipping, terminals, and conversion or development of a natural gas-fired generation. Geographically, it has operations in North America, the Caribbean, and Europe. – Warrior Trading News
