(Bloomberg) -- Many of the banks that helped Venture Global Inc. go public now see the liquefied natural gas exporter’s stock price languishing even more from its already scaled back launch.
The Arlington, Virginia-based company’s initial public offering has been a flop, pricing 45% below its original $110 billion valuation. Since its debut last month, it has wiped out about $20 billion in paper value.
More than a dozen analysts have initiated coverage of Venture Global Tuesday, giving the stock an average price target of $21 per share — below its $25 IPO price. Still, it has seven buy recommendations and six holds.
Despite getting a lift Tuesday from the raft of buy ratings, the stock has fallen over 30% since it went public and is still trading in the $16 range.
Bank of Nova Scotia, which was a part of the IPO, tagged Venture Global with a $17 price target, a low among bank analysts, and questioned whether it would be a “grandmaster” in the global LNG chess game or “master of none.” Analyst Brandon Bingham said coordinating both financing and expansion projects while non-LNG earnings contribute less than 5% to growth plans are also a challenge.
The most bullish analysts on Wall Street include lead banks JPMorgan Chase & Co. and Goldman Sachs Group Inc., which both initiated with buy-equivalent ratings and $25 and $29 price targets, respectively.
JPMorgan analyst Jeremy Tonet says the stock offers investors “commodity torque,” but that’s a “two-way street.” Analysts see LNG prices possibly falling if sanctions against Russia are scaled back or removed as US tries to broker talks on ending Russia’s war with Ukraine at a meeting in Riyadh.
Indeed, all across Wall Street, analysts see Venture Global offering investors increased exposure to LNG. The stock gives investors a “double-edged sword” in the form of relatively higher uncontracted LNG capacity, said Spiro Dounis, an analyst at Citigroup Inc., which was not involved in the IPO.
The potential for the LNG market to be oversupplied in 2027 “may result in compressed margins and increased volatility,” he added.
Venture Global’s aggressive valuation, litigation with customers and its governance overhang following its public debut are among the reasons Dounis initiated with a neutral rating and a near Street-low target of $18 a share.
