BKV Corporation (BKV) Receives Buy Rating and $24 Price Target: Analyst Highlights ‘Closed-Loop’ System and Growth Potential
Truist Securities analyst Bertrand Donnes has initiated coverage on BKV Corporation (BKV) with a Buy rating and a price target of $24. Donnes believes BKV’s unique business model and strong growth prospects make it a compelling investment opportunity.
The analyst highlights BKV’s ‘closed-loop’ system, where its integrated asset base efficiently guides gas production from start to end use. This integrated approach gives BKV a competitive edge over peers, allowing for streamlined operations and optimized resource utilization. While the market currently undervalues the potential of each segment within BKV, Donnes believes this underappreciation presents a significant investment opportunity.
Donnes points to BKV’s strong backing by its parent company, Banpu, as a source of downside protection. Banpu aims to hold a 30-50% stake in BKV, suggesting potential future equity sales, but also providing stability and financial support for BKV’s operations.
The analyst also highlights BKV’s strategic partnerships, particularly with Banpu Power. This partnership should streamline power plant expansion efforts, leveraging Banpu Power’s expertise and resources. Additionally, BKV’s Power JV is well-positioned to expand into data center demand through new plant acquisitions, capitalizing on the growing need for data center infrastructure.
In the CCUS segment, BKV is positioned for larger projects focused on industrial emitters. The company’s ‘closed-loop’ system allows for efficient capture and storage of carbon emissions, offering a compelling solution for industries seeking to reduce their environmental impact.
Donnes expects BKV to deliver on all three segments by 2025. The company is well-positioned to consolidate Barnett upstream assets through equity-based deals that could reduce leverage. BKV’s Power JV is set to expand into data center demand, while the CCUS segment is poised for larger projects.
The analyst estimates EBITDAX of $194 million in 2024, $307 million (consensus of $306 million) in 2025, and $423 million (vs. estimate of $432 million) in 2026.
