New Fortress Energy downgraded to Sell from Hold at Deutsche Bank

Deutsche Bank analyst Chris Robertson downgraded New Fortress Energy to Sell from Hold with a price target of $7.60, down from $21. The firm cites pending dilution to the equity and its updated views around inherent risks in the business model that it believes should be reflected in the valuation multiple for the downgrade. New Fortress announced that as part of an agreement to suspend the maximum debt to total capitalization ratio quarterly covenant tests, the company must complete “several things” before October 7, including receiving a binding commitment or priced transaction on its 6.75% Senior 2025 notes as well as the sale of $250M worth of common equity or preferred equity convertible into common equity, the analyst tells investors in a research note. other words, dilution of the common shares is all but assured in the coming days and further dilution could be on the table should Ceiba Energy elect to convert its preferred shares in the coming months, says Deutsche Bank.