ORA - Ormat Technologies upgraded to Buy after stock's recent drop

2023-08-07 13:15:45 ET

Ormat Technologies ( NYSE: ORA ) +2.4% in Monday's trading as Roth MKM upgraded the stock to Buy from Neutral with a $92 price target, citing likely tailwinds for the business after the stock dropped 4% upon reporting mixed Q2 results and maintaining full-year guidance.

MKM Roth analyst Justin Clare said he expects near-term earnings growth will be driven by ~100MW of capacity added in Q2, further geothermal capacity expansion in H2 2023, and increasing support from ITC/PTC tax benefits, and he anticipates attractive pricing for new geothermal PPAs above $90/MWh and tolling agreements for storage.

Following the mixed Q2, Clare expects Ormat's ( ORA ) earnings will improve in H2 with further growth in 2024 thanks to increasing generating capacity and contracted storage projects that drive revenue growth and support higher gross margins.

Clare said Ormat ( ORA ) has traded in a range of 11-14x near-term EBITDA over the past year, and with the stock trading toward the lower end of the range at ~11.4x FY 2024 EBITDA, he believes current levels represent an attractive entry point.

More on Ormat Technologies:

• Financial and valuation comparison to sector peers
• Analysis: Ormat Technologies: Promising Future, But Valuation Is Worrying
• Stock price return: Down 9.5% YTD, down 13.5% in the past 12 months

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