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Citi sees 30% upside in Navigator Holdings stock citing strong ethylene demand

EditorEmilio Ghigini
Published 07/31/2024, 04:27 AM
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On Wednesday, Navigator Holdings Ltd. (NYSE:NVGS) stock was initiated with a Buy rating by a major financial services company, accompanied by a price target of $22.00. The firm's analysis highlighted Navigator Holdings' unique position in the market, with its exposure to the increasing global demand for ethylene and cost-effective US-based ethane.

The company's shipping rates are expected to remain positive, supported by an aging global fleet and an order book that is not keeping pace with the rising demand. In addition to its shipping operations, Navigator Holdings is expanding its export terminal, which is anticipated to offer investors attractive infrastructure returns and integrated synergies.

Currently trading at a discount compared to its peers, Navigator Holdings presents more than a 30% potential increase to the firm's target price. The $22.00 price target is based on a net present value (NPV) methodology and suggests a 5.6 times multiple of the estimated 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA).

In other recent news, Navigator Gas has disclosed the upsizing and pricing of a secondary offering of 7 million shares by BW Group Limited. The company also intends to repurchase half of the offered shares, totaling 3.5 million shares, directly from the underwriters. This development is managed by Citigroup and DNB Markets, Inc.

Simultaneously, Navigator Gas reported strong Q1 2024 earnings, revealing an adjusted EBITDA of $74 million and an adjusted net income of $23 million. In response to these results, Stifel has raised its target price for Navigator Gas from $19 to $21, maintaining a "Buy" rating.

In addition, the company has announced a $2.5 million investment into preliminary studies for a clean ammonia export facility. An expansion of its ethylene capacity is also in the plans, set to commence in 2025, projected to significantly increase annual EBITDA. These are the recent developments in the company's operations.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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