Morgan Stanley analyst Devin McDermott has maintained their bearish stance on EE stock, giving a Sell rating yesterday.
Devin McDermott has given his Sell rating due to a combination of factors surrounding Excelerate Energy’s recent acquisition of New Fortress Energy’s Jamaica business. While the acquisition provides Excelerate Energy with a strategic downstream platform and potential for growth, the transaction is valued at a high multiple of approximately 9x EBITDA, which may raise concerns about the financial prudence of the deal.
Additionally, although the acquisition is expected to increase Excelerate Energy’s EBITDA in the coming years, the company is relying on a significant amount of debt to finance the transaction, including an $850 million bridge facility. This reliance on debt could pose risks to the company’s financial stability, especially if the anticipated growth and integration benefits do not materialize as expected. These factors contribute to McDermott’s cautious outlook and the Sell rating for Excelerate Energy’s stock.
In another report released yesterday, Wells Fargo also maintained a Sell rating on the stock with a $23.00 price target.