Cheniere Energy Inc. LNG delivers clean, safe, and affordable liquefied natural gas to integrated energy companies, utilities, and energy trading companies. It also owns an interest in Cheniere energy partners CQP.

The Analysts: Raymond James analysts JustinJenkin maintains a Strong Buy rating on Cheniere Energy, which is raising its price target to $210 per share from $178.

Why it matters: Noting that there may be negative stretching in midstream stocks which could be attributed to the 15% decline in benchmark LNG prices q/q.

Also read: China benefits as energy companies profitably divert US LNG tankers

It’s important to note that historically, investors are looking for guidance for 2023 in the third quarter, although the midstream segment is typically reluctant to provide full-year guidance in the third quarter, analysts reported.

Meanwhile, Jenkins reported that midstream financial models are underrated as quarters and years of solid free cash flow generation accumulate and total return potential improves.

Energy companies involved in the midstream provide processing, storage, transportation and marketing of oil and natural gas liquids. With midstream names positioned behind major E&P firms, Jenkins believes winter volatility may offer upside to the natural gas industry, particularly those focused on exports.

With midstream earnings typically based on volume, price shifts will offset tailwinds as volume-driven capital spending hurts free cash flow. Finally, Jenkins remains cautious on natural gas production growth as there is reason to believe that moderate but geographically broad-based growth may be more likely in US markets.

The central theses

• According to Jenkings, Cheniere Energy has been one of our best-traded stocks in our space since the second quarter, which may be due to the impressive mid-period capital allocation update.
• Raymond James raises its Adjusted EBITDA estimates for all…