Stifel has reiterated its Buy rating on Chart Industries (NYSE: NYSE:GTLS), with a steady price target of $199.00 as the firm's stance comes after a period in which Chart Industries experienced a drop in guidance due to delays in revenue recognition last quarter.
Despite these setbacks, which led to a decline in GTLS shares, Stifel sees the company's valuation as attractive and notes the strong fundamental momentum of the business.
The reduction in guidance was attributed to several projects affecting revenue timing, but a significant factor was the delay of Venture Global's CP2 LNG project, pending FERC approval.
The approval has now been granted, and construction is expected to commence next month. Stifel anticipates that this development will lead to an improvement in Chart Industries' "unbilled contract revenue," which in turn should enhance cash flows for the remainder of the year.
Stifel's analysis suggests that the only major concern regarding Chart's financial position is related to cash flow, given the company's otherwise robust revenue, growing backlog, and decreasing leverage. The approval and upcoming commencement of the CP2 LNG project are seen as positive catalysts that could alleviate the current cash flow issues.
Chart Industries specializes in engineering and manufacturing equipment for the energy and industrial gas industries, including components for liquefied natural gas (LNG) and industrial gas applications. The company's performance is closely watched by investors as a barometer for the broader industry's health and growth prospects.
The FERC approval marks a turning point for the CP2 LNG project, which is expected to be a significant contributor to Chart Industries' revenue stream once construction gets underway.
In other recent news, Citi lowered the company's share price target from $210 to $190 due to backlog conversion challenges, despite maintaining a Buy rating. This followed Chart Industries' second-quarter earnings, which did not meet expectations, leading to a roughly 10% reduction in the full-year 2024 EBITDA guidance.
Chart Industries' revenue forecast for 2024 is now projected to be $4.28 billion, falling short of both the consensus estimate and the company's own guidance.
Stifel also adjusted its price target for Chart Industries, reducing it from $220 to $199, while keeping a Buy rating. The firm noted that despite robust growth, Chart Industries has had to revise its guidance downwards multiple times due to delays in revenue recognition. In its recent earnings call, Chart Industries reported a 12% increase in orders to $1.16 billion and an 18.8% rise in sales to $1.04 billion.
InvestingPro Insights
As Chart Industries (NYSE:GTLS) navigates through recent challenges and looks toward future growth, real-time data from InvestingPro offers additional context for investors. With a market capitalization of approximately $4.42 billion and a notable revenue growth of 70.25% in the last twelve months as of Q2 2024, the company shows a strong expansion in its financial reach. The growth is further underscored by a gross profit margin of 32.42%, indicating healthy profitability in operations.
InvestingPro Tips highlight that Chart Industries is trading at a low P/E ratio relative to its near-term earnings growth, suggesting that the stock may be undervalued given its growth prospects. Furthermore, analysts anticipate sales growth in the current year, reinforcing the positive outlook shared by Stifel. It's important for investors to consider that the stock has experienced considerable price volatility, with a 1-month price total return showing a significant decrease of 23.36%. This could represent an opportunity for investors looking to buy in at a lower price point ahead of expected improvements in the company's financial performance.
For those seeking deeper investment analysis, InvestingPro provides additional tips, including insights into the company's debt burden and profitability predictions for the year. Interested readers can find more details and tips on Chart Industries by visiting https://www.investing.com/pro/GTLS.
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