Ormat Technologies Slips After UBS Downgrade Cites Slower Growth Outlook

Shares of Ormat Technologies Inc. (NYSE:ORA) fell 3.4% in Thursday trading after analysts at UBS downgraded the stock to Neutral from Buy and significantly cut their price target.

Rationale for the Downgrade

In a note to clients, UBS analyst Jon Windham cited reduced earnings upside potential through 2028 and valuation multiples that are now largely in line with industry peers. The bank slashed its price target on Ormat's stock to $100 from a previous $157.

The downgrade follows Ormat's own revised guidance issued during its investor day on September 8. The company lowered its 2028 adjusted EBITDA run-rate forecast by 3%, which UBS noted implies limited margin improvement until 2029.

Revised Growth Forecasts

UBS has adjusted its financial models for Ormat based on the new outlook, anticipating a slowdown in growth. Key changes to the bank's forecast include:

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• A reduction in the storage segment's four-year compound annual revenue growth rate (CAGR) for 2026-2030 to 24% from a prior 32%.
• An expectation that 2027 adjusted EBITDA growth will decelerate to 9%, down from a forecasted 13% in 2026.

"We continue to expect solid execution in ORA core geothermal business," the analyst wrote. However, UBS anticipates "limited earnings upside risk until 2029E."

Valuation and Market Context

The UBS note stated that Ormat's stock is now trading broadly in line with the peer-group median on an EV/EBITDA-to-growth basis. This suggests the market has already priced in the company's expected growth trajectory. Consequently, UBS now views the stock's risk-reward profile as balanced at its current levels.