Jefferies upgrades Ormat to Buy on valuation ‘disconnect’

Jefferies upgraded Ormat Technologies (ORA) to Buy from Hold with a price target of $78, up from $73. The firm says that as renewables face policy headwinds and lower growth into 2025, it favors power stocks benefitting from re-contracting upside driven by demand for decarbonized baseload power, like Ormat’s 1.5GW portfolio. Despite Ormat already clearing prices at the high end on renewed purchase price allocations, recent trading multiples imply a “disconnect” on the stock’s valuation versus its legacy power peers, the analyst tells investors in a research note. Jefferies upgraded the shares in anticipation of a correction closer to the power peer set, implying 18%.