Ormat Technologies stock falls after UBS downgrade to neutral

Investing.com -- Ormat Technologies Inc (NYSE: ORA) shares fell 3.4% Thursday after UBS downgraded the stock to Neutral from Buy and slashed its price target to $100 from $157.

UBS analyst Jon Windham downgraded the geothermal energy company following reduced earnings upside potential through 2028 and valuation multiples now in line with peers. The downgrade came after Ormat revised down its 2028 adjusted EBITDA run-rate guidance by 3% at its September 8 investor day, implying limited margin improvement until 2029.

The analyst reduced the firm's storage segment four-year revenue compound annual growth rate forecast for 2026-2030 to 24% from 32%. UBS now expects 2027 adjusted EBITDA growth to decelerate to 9% from 13% in 2026, with limited earnings upside risk anticipated until 2029.

"We reduce our recommendation to Neutral from Buy driven by limited earnings upside potential through 2028E and valuation multiples generally in-line with peers," Windham commented. "We continue to expect solid execution in ORA core geothermal business. However, we forecast 2027E adj. EBITDA growth to decelerate to 9% from 13% for 2026E and anticipate limited earnings upside risk until 2029E."

The analyst noted that Ormat is trading broadly in line with the peer-group median on an EV/EBITDA-to-growth basis, suggesting the market has already priced in the company's expected growth outlook. UBS views the stock's risk-reward profile as balanced at current levels.

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