Solaris Energy Infrastructure Inc’s (NYSE:SEI) earnings could grow "several-fold over the coming years," according to Needham analyst Sean Milligan.
The Solaris Energy Infrastructure Analyst: Milligan initiated coverage with a Buy rating and price target of $97.
The Solaris Energy Infrastructure Thesis: The company has contracts that are already in place that reshape the balance sheet and fully fund the build program, Milligan says.
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Solaris builds on-site, natural-gas power plants, and Milligan says few can match the company’s contracted scale. He added that:
- Much of the Solaris Energy Infrastructure’s planned power plants are already under contract.
- Most of these contracts are with investment-grade counterparties.
- Around 3.2 GW (gigawatts) pro forma fleet carries more than 2.2 GW of long-term power agreements with three technology companies.
- The contract economics translate to around $400,000 per MW (megawatt) of adjusted EBITDA at scale.
As these contracted power plants begin operations, Solaris Energy Infrastructure’s earnings may grow several-fold, as the company has already reshaped its balance sheet to fund this new construction, Milligan said.
Beyond these, management has identified a pipeline of ~$600-$800 million in opportunities across the existing footprint, which could generate another $120-$160 million in incremental adjusted EBITDA, the analyst noted.
"Roughly 0.9 GW of the fleet remains open; additional awards at framework terms de-risk 2028+ estimates," he further wrote.
SEI Price Action: Shares of Solaris Energy Infrastructure had risen by 2.63% to $78.82 at the time of publication on Monday.
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