Ormat Technologies is a buy, Roth says

Its first quarter results are in the books and Roth MKM analyst Justin Clare thinks there is money to be made on Ormat Technologies (Ormat Technologies Stock Quote, Chart, News, Analysts, Financials NYSE:ORMA).

On May 8, ORA reported its Q1, 2024 results. The company posted Adjusted EBITDA of $141.2-million on revenue of $224.2-million, a topline that was up 21%, year-over-year.

“During the first quarter of 2024, Ormat delivered exceptional growth, driving a 21.0% increase in total revenue, a 25.5% rise in earnings per diluted share, and a 14.4% increase in Adjusted EBITDA, supported by our strong performance across all segments,” said CEO Doron Blachar. “This performance was fueled by our organic growth that includes the successful execution of our strategic plan and enhanced operational efficiency at existing facilities, which together contributed more than 50% of the increase in Revenues and in EBITDA. In addition, our results were positively impacted by our recently acquired Enel Green Power North America asset portfolio. Further, our first quarter gross margin and Adjusted EBITDA performance would have seen even stronger relative comparisons on a year-over-year basis when considering for the $6.7 million of business interruption insurance proceeds that were embedded in the previous year’s results.”

The analyst says the quarter demonstrated that demand continues to support a favourable pricing environment for ORA.

“ORA delivered a Q1 beat and reiterated 2024 guidance. Project timelines remain on track, and ORA reiterated its long-term 2026 targets,” he wrote. “We believe the company is well-positioned to uniquely deliver round-the-clock renewable power with its geothermal assets, while supporting the firming of intermittent renewables sources such as wind and solar with its battery storage projects. We expect rising electricity demand to support attractive PPAs and contracts for both geothermal and storage assets.”

In a research update to clients May 13, Clare maintained his “Buy” rating and price target of $76.00 on ORA.

The analyst thinks the company will post EBITDA of $530.7-million on revenue of $875.0-million in fiscal 2024. He expects those numbers will improve to EBITDA of $586.9-million on a topline of $987.7-million in fiscal 2025.

“We reach our price target by applying an 12.3x multiple to our 2024 estimated EBITDA of $531mn,” Clare concluded. “Factors that would cause shares of Ormat to deviate from our price target include: changes in regulation or incentives that diminish demand for renewable energy, higher interest costs or availability of project financing, and geopolitical unrest.”

What does Ormat Technologies do (via Roth MKM)

Ormat Technologies, Inc. (ORA) is a leading, vertically-integrated company operating in the geothermal and recovered energy power business. ORA designs, builds, owns, and operates geothermal and recovered energy-based power plants globally. ORA’s plants have a total capacity of approximately 700 MW and are located in the US, Guatemala, and Kenya. ORA continues to evaluate additional opportunities worldwide, specifically in Mexico, Chile, Indonesia, and Ethiopia. Additionally, ORA designs, manufactures, and sells equipment for geothermal and recovered energy-based electricity generation, remote power units, and other power generating units, while providing services for engineering, procurement, construction, operation, and maintenance of plants. ORA’s headquarters is located in Reno, NV.