Hold Rating for New Fortress Energy Amid Financial Challenges and Strategic Uncertainties

Morgan Stanley analyst Devin McDermott maintained a Hold rating on New Fortress Energy (NFE – Research Report) today and set a price target of $4.00.

Devin McDermott has given his Hold rating due to a combination of factors impacting New Fortress Energy’s financial outlook. The company’s recent first-quarter results were significantly below both consensus and Morgan Stanley’s estimates, leading to a downward revision of future earnings forecasts. This has resulted in a substantial reduction in the projected EBITDA for 2025-26 by approximately 30%, which raises concerns about the company’s financial stability.
Additionally, New Fortress Energy faces challenges with its gas supply contracts, particularly in Puerto Rico, where negotiations for long-term agreements are ongoing. The company has been disqualified from a recent bid for emergency power, adding uncertainty to its future revenue streams. Despite these challenges, management is focused on maintaining financial health by exploring various strategic options, including potential new contracts and asset sales. However, the risks associated with these factors justify a Hold rating at this time.