GTLS - Chart Industries cut at Wells Fargo as Howden deal seen reducing growth rate

Chart Industries ( NYSE: GTLS ) -8.6% in Monday's trading after Wells Fargo downgraded shares to Equal Weight from Overweight with a $148 price target, slashed from $248, which reflects a 50% cut in the firm's forecast for the FY 2024 EBITDA multiple to 9x on an altered growth outlook and risk assumptions that accompanied the Howden deal.

While the $4.4B acquisition creates a bigger and more diversified clean energy company, Chart's ( GTLS ) post-transaction growth rate likely will be reduced, implying a lower valuation, according to Wells Fargo analyst Roger Read.

While admitting the downgrade "arrives a bit late following this major acquisition surprise... we recognize a significant loss in confidence in Chart's financial resilience (all debt/preferred financing), pace of growth (much slower post-acquisition), and dilution of the impact of large-scale LNG orders/growth," Read wrote.

Discussing Chart Industries' ( GTLS ) Howden deal, "loading up a company with preferred stock and debt [generally] allows less leeway for unforeseen complications or mistakes," Long Player writes in an analysis posted recently on Seeking Alpha .

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