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Stifel’s reassessment comes in light of Cheniere Energy (NYSE:LNG) Partners’ announcement to lower its annual distribution from $4.13 per unit in 2023 to an expected midpoint of $3.25 per unit in 2024. This reduction is part of the company’s strategy to accumulate cash reserves to fund the equity portion of the planned Sabine Pass expansion project.
The analyst pointed out that the Sabine Pass expansion is not expected to reach a final investment decision (FID) until at least 2026, with production potentially commencing in 2030 or later. This timeline is due to current regulatory uncertainties which could delay the project’s advancement. Consequently, any significant growth in distributions is projected to be deferred for an extended period.
The new valuation set by Stifel at $50 is based on a 6.5% yield on the projected 2024 distribution of $3.28 per unit. Despite the downgrade in the price target and future distribution expectations, the firm suggests that the reduced risk of further downside for Cheniere Energy Partners no longer supports a Sell rating.
In the wake of Stifel’s recent rating adjustment for Cheniere Energy Partners, LP (NYSE: CQP), real-time data from InvestingPro provides additional context for investors considering the company’s stock. Despite the lowered annual distribution forecasted for 2024, Cheniere Energy Partners boasts a strong track record of maintaining and raising dividends, having done so for 18 consecutive years, with the last seven seeing consistent increases. This aligns with the InvestingPro Tip highlighting that the company pays a significant dividend to shareholders and has a history of raising its dividend annually.
From a valuation perspective, Cheniere Energy Partners’ current P/E ratio stands attractively at 5.01, based on the last twelve months as of Q3 2023. This metric points to a potentially undervalued stock, especially when considering the InvestingPro Tip indicating that analysts predict the company will be profitable this year. Moreover, the company’s dividend yield as of early 2024 is notably high at 7.82%, which may appeal to income-focused investors.
However, it is important to note that the company is trading at a high Price / Book multiple of 38.32, suggesting a premium compared to its book value. While this might raise some valuation concerns, the company’s profitability over the last twelve months and its high return over the last decade, as per InvestingPro Tips, could justify the premium for certain investors.
Investors looking for deeper insights and additional InvestingPro Tips can find them at: https://www.investing.com/pro/CQP. There are 7 more tips available that could help investors make a more informed decision. To access these tips and more detailed analyses, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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