Cheniere Energy (LNG) PT Raised to $128 at BofA Securities on Pricing Stabilizing at a High Level

BofA Securities analyst Julien Dumoulin-Smith raised the price target on Cheniere Energy (NYSE: LNG) to $128.00 (from $124.00) after LNG spot prices peaked at ~$50/mmbtu JKM (Japan-Korea Marker) in late December, before pulling back to ~$33/mmbtu amid less concern of an acutely tight winter demand backdrop.

The analyst reiterated a Buy rating, stating "we still see support for LNG shares pivoting from this robust commodity backdrop towards one supported by the uncertainty of geopolitical concerns. NATO-Russia discussions last week highlighted significant disagreements remain, and continued risks that the Russia/Ukraine conflict could escalate and potentially cause energy prices to spike, particularly given ongoing Europe-Russia disputes (e.g. Yamal, Nordstream 2) and Europe’s increasingly limited gas-to-coal switching ability. In Asia, gas-to-coal switching has been somewhat constrained by Indonesia’s temporary coal export ban implemented Jan 1st & relaxed last week due to critically low local coal stockpiles. The Indonesian angle has added a further transient twist to Asian gas demand in 1Q22. The question is how protracted the backdrop will enable LNG – and whether European tensions could drive further LNG contracting. We’re more bullish on the former. China’s Oct. order to ramp coal production in response to the power crisis and a warmer-than-expected start to the European winter have been offsets."

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