Stifel maintained its Buy rating on shares of Golar LNG Ltd . (NASDAQ:GLNG) with a price target of $53.00. The firm's position comes amid speculation of a potential acquisition of Golar by its private exploration and production partner Perenco. Perenco previously acquired a 10% stake in the company.
Golar LNG had been approached by several infrastructure funds for a potential private takeover. However, the company did not pursue these overtures, believing in the potential for further growth. Since then, Golar's share price has seen an appreciation, and the company has made significant progress on new projects. Analysts anticipate that Golar is nearing the finalization of several new contracts that could substantially re-rate the company's stock value.
Should an acquisition be on the table, analysts predict that the offer would need to be at a significant premium to the current share price to be considered by Golar's management. The expected price point for such a deal would likely exceed $60 per share, given the strides the company has made and its current trajectory. The notion is that any offer below $50 per share would not be entertained.
The potential acquisition by Perenco is seen as challenging, especially at the price levels anticipated by market observers. The high premium expected reflects the progress Golar LNG has made and the future contracts that are believed to be within close reach. These developments could lead to a revaluation of the company's equity, setting a high bar for any acquisition proposals.
Golar LNG Limited has reported robust financial results for the second quarter of 2024, with operating revenues of $65 million and an adjusted EBITDA of $59 million. The company also has a strong cash position, holding approximately $630 million.
As part of its expansion efforts, Golar LNG has secured a 20-year charter in Argentina and is actively seeking deployment opportunities worldwide. The company has also reached a commercial reset agreement with BP (NYSE:BP), which will enable the refinancing of the Gimi FLNG (OL:FLNG) project and provide about $220 million in payments across 2024 and 2025.
In addition to these developments, Golar LNG is planning to order a third FLNG, Mark II, to further increase its capacity. The company is in ongoing discussions for potential FLNG deployments in regions including West Africa, South America, the Middle East, and Southeast Asia.
InvestingPro Insights
Recent data from InvestingPro adds context to Stifel's bullish stance on Golar LNG Ltd. (NASDAQ:GLNG). The company's market capitalization stands at $3.7 billion, with a P/E ratio of 26.8, suggesting investors are willing to pay a premium for future earnings potential. This aligns with the article's mention of anticipated new contracts that could boost the company's value.
InvestingPro Tips highlight that management has been aggressively buying back shares, which often signals confidence in the company's prospects. Additionally, net income is expected to grow this year, supporting the notion of Golar's improving financial position. These factors could contribute to the high acquisition premium discussed in the article.
The company's strong performance is further evidenced by its 56.99% price total return over the past year and its current trading near its 52-week high. These metrics underscore why Golar's management might be reluctant to entertain offers below $50 per share, as mentioned in the article.
For investors seeking a deeper understanding of Golar LNG's potential, InvestingPro offers 11 additional tips, providing a more comprehensive analysis of the company's financial health and market position.
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