On Tuesday, Jefferies initiated coverage on Ormat Technologies (NYSE:ORA) with a Hold rating, setting a price target of $73.00 for the company's shares.
According to InvestingPro data, this target suggests potential upside from the current price of $68.56, though analysis indicates the stock may be trading above its Fair Value. The analysts provided insights into the geothermal and battery storage developer's prospects, citing near-term recontracting as a potential key driver of the company's upside due to improvements in Western Resource Adequacy (RA) and Renewable Energy Certificate (REC) prices.
Ormat Technologies' expanding storage fleet is seen as having a 'fast-to-market' advantage, which is expected to bolster the company's top-line growth. The company has demonstrated solid performance with revenue growth of 12.2% in the last twelve months, reaching $890.25 million. While the core geothermal business is also growing, it is doing so at a more modest pace. Dumoulin-Smith noted that Ormat's EBITDA, currently at $440.1 million, is forecasted to significantly grow at an 11% compound annual growth rate (CAGR) from 2023 to 2028.
Despite the positive growth outlook, the analyst pointed out that execution risks remain a concern, particularly in light of Ormat's recent performance record. These risks could potentially affect the company's trajectory and the realization of the projected EBITDA growth.
Ormat Technologies specializes in the development and operation of geothermal and recovered energy-based power plants. The company's focus on renewable energy and storage solutions aligns with the growing trend towards sustainable and reliable energy sources.
With a market capitalization of $4.15 billion and a remarkable 20-year track record of consistent dividend payments, as highlighted by InvestingPro, the company has demonstrated long-term stability. The Hold rating suggests that while there are growth opportunities for Ormat, potential investors should also consider the execution risks that the company faces.
In other recent news, Ormat Technologies has reported robust financial growth, with revenues increasing by 21%, earnings per diluted share rising by 25.5%, and a 14.4% increase in adjusted EBITDA. Citi has adjusted the price target for Ormat shares to $87, maintaining a neutral rating, following the company's announcement of increased EBITDA guidance and resolution of a previous SEC investigation.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.