The market is too pessimistic about next year's LNG profits. I retain Buy but lower my twelve-month target to $14.32 because the proposed power business adds funding uncertainty before it adds contracted earnings.
Key points
- $14.32 a share is my reduced twelve-month target, supported by gas operations.
- $17.2 billion is the conditional equipment framework, not an immediate spending obligation.
- $4.1 billion was the first-half 2026 gap between operating cash and construction spending.
The call
The market is too pessimistic about the gas business. At my reduced earnings multiple, the price requires about $7.3 billion of 2027 adjusted EBITDA, meaning profit before interest, tax, depreciation and selected adjustments. That corresponds to a $4.99 processing fee per million British thermal units under my volume and cost assumptions.
Plaquemines supplies nearly all operating profit ($ millions)Source: VG June 2026 10-Q, Note 18, filed August 10, 2026; Q2 2026, before interest and tax.
I expect a smaller profit retreat, not an AI windfall. My 2027 forecast combines 2,000 trillion British thermal units sold with a $5.20 average processing fee. CP2 startup and medium-term gas contracts should offset some lost startup profits; November's results will test contracting progress and the construction schedule.
Valuation
| Our estimate or assumption | Value |
|---|
| Adjusted EBITDA, 2027 | $7.7 billion |
| Normalized diluted earnings, 2027 | $0.95 a share |
| Earnings multiple, October 2027 | 15 times |
| CP2 growth premium included in multiple | $2.86 a share |
| Incremental AI-business value | $0 a share |
| Twelve-month target | $14.32 a share |
The target uses unrounded earnings after financing costs, taxes and subsidiary claims across both share classes and options. I reduce the multiple from 16 times because undisclosed reservation payments introduce funding uncertainty; three turns still reward CP2 growth, but neither that premium nor an AI premium survives diverted construction funding. Upside supports Buy, although weaker gas fees could produce substantial losses.
What next year's average processing fee means for the sharesAnalyst 2027 scenarios, October 15, 2026; 2,000 TBtu sold and 15 times normalized earnings.
Risks
- Power spending could dilute shareholders before customers commit; watch reservation payments, purchase orders and financing terms.
- Gas prices could weaken as competing export capacity opens; watch contracted processing fees, not export volumes alone.
- Construction delays or arbitration damages could absorb cash; watch CP2 milestones, borrowing costs and the May 2027 BP hearing.
What would change my mind
I would reverse the buy if expected 2027 adjusted EBITDA falls below $7.3 billion, CP2 slips beyond 2027, or unfunded power commitments threaten LNG completion.
