Flex LNG’s $450m cash pile supports long-term dividends, Fearnley Securities said in a fresh note after Tuesday’s third-quarter report.
The Norwegian investment bank raised its recommendation on shares of the John Fredriksen-backed gas carrier owner from “hold” to “buy”.
Analyst Fredrik Dybwad said: “We upgrade FLNG [Flex] to buy as the current yield screens attractive, considering i) a stellar backlog, ii) a massive cash position supporting dividend capacity and iii) a long-term positive outlook for the LNG shipping market.”
The target price was adjusted to NOK 320 ($28.86) from NOK 325.
Shares rose 3.9% on Tuesday and closed at NOK 272.40 in Oslo.
“An LNGC [LNG carrier] market making weekly lows has had its toll on the share price of FLNG, but the current dividend is cemented in our view — despite somewhat higher open market exposure on the back of Constellation being redelivered in the first quarter 2025,” Dybwad said.
Fearnley Securities sees an $80,000 per day contract for the vessel, in line with current five-year charter rates.
“The LNGC market remains oversupplied and is unlikely to firm before 2027/2028 when significant liquefaction capacity meets fleet growth,” Dybwad added.
“The US election outcome should have a positive impact on the LNGC market, with several projects potentially reaching FID [final investment decision] once the moratorium on new LNG export licenses is reversed by the new US administration.”
DNB Markets’ analyst Jorgen Lian said Flex LNG’s yield is “highly appealing”.
“We see no reason to doubt its $0.75 quarterly dividend per share, offering an attractive 13% dividend yield into better markets,” Lian said.
DNB has a “buy” on the stock, with a target price of NOK 335, previously NOK 345.
“Flex LNG remains insulated in a challenging freight market, with only one vessel open into a potentially poor 2025, while the two positions for 2026 are still likely to see options extended into 2028,” Lian added.
Arctic Securities said Flex LNG’s “valuation is attractive still in our book”.
Analyst Kristoffer Barth Skeie reiterated his buy rating and raised the target price to NOK 311 from NOK 291.
“Next trigger for the stock could be the recontracting of Flex Constellation, which comes open at the end of the first quarter of 2025,” Barth Skeie said.
“We reiterate Buy as we believe a 12% yield on the current share price is too wide and expect a contraction, with our target price of NOK 311 per share reflecting a running yield of 11%,” he said.
