BTIG downgrades New Fortress Energy, says debt overhang trumps Brazil build-out
Investing.com -- BTIG downgraded liquefied-natural-gas supplier New Fortress Energy (NASDAQ:NFE) to Neutral from Buy, warning that concerns over a heavy debt load and limited near-term catalysts outweigh the promise of new terminals and power plants in Brazil.
The stock, which BTIG said has slumped about 65 % since first-quarter results in mid-May, was up 2.6% at $2.32 in afternoon trading, still down more than 90 % from its 2021 peak.
New Fortress’s next bond maturity – about $510 million due September 2026 – is trading in the 40-cent range, implying a yield near 90 %, BTIG noted.
Covenants on the company’s revolving credit and term-loan facilities restrict early buybacks of that debt, making another exchange involving new equity “a potential solution,” the analysts wrote.
Although cash constraints eased after a $1.06 billion sale of Jamaican assets in March, BTIG expects the balance sheet to remain an overhang until the company’s largest growth project, the 1.6-gigawatt PortoCem gas-to-power plant in Brazil’s northeast, begins operations in mid-2026.
Maintenance work in Puerto Rico and the disposal of Jamaican operations cut first-quarter terminal volumes by roughly a quarter. San Juan units 5 and 6 still generate about $150 million to $200 million in annual EBITDA, but a wider island-wide gas contract – potentially much larger – expires this week and its renewal is uncertain, the note said.
In Brazil, a smaller Barcarena complex is ramping toward a roughly $200 million EBITDA run-rate this year, yet the Santa Catarina terminal may not contribute meaningfully until 2027.
New Fortress trades near 17 times BTIG’s 2025 EBITDA estimate – a level the brokerage sees as “fairly valued” given few near-term growth drivers and lingering leverage worries.
BTIG still expects management to address liquidity, possibly by selling additional non-core assets or partnering on Pacific terminals and other infrastructure, but said those moves may take time to rebuild investor confidence.
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