New Fortress: Brazilian Minimum Capacity Deal Increases Our Valuation to $39 per Share

For New Fortress Energy, 2023 has been filled with significant wins. The team appears to have closed out the year with one of the most significant deals yet that raises our fair value estimate to $39 per share from $30. At current prices, we now view shares as fairly valued. Our no-moat rating is unchanged. Unlike the Pemex deal, the deal with Brazil is significant. It should bring in material cash flows, about $280 million a year for 15 years beginning in 2026, without much in ongoing costs after spending $800 million to expand its existing power generation and import capacity over the next two years. By the time the contract is expected to come into force in 2026, we forecast the debt/EBITDA ratio will be below 3 times, which will still allow New Fortress to contract with large liquefied natural gas providers for larger volumes.