On Wednesday, Barclays initiated coverage on NET Power Inc. (NYSE: NPWR) with an Equalweight rating and established a price target of $13.00. The new coverage is based on the company's innovative power generation technology that boasts nearly zero atmospheric emissions.
NET Power, an energy technology firm, has been working on this technology since 2010, with its 50 MW demonstration plant starting tests in 2018. The technology is designed to deliver a combination of reliable, clean, and cost-effective energy, which aligns with the decarbonization goals of many utilities, corporations, and governments.
Barclays acknowledges the potential rewards of NET Power's technology but also notes the risks involved. The technology, while promising, has not been fully de-risked, with several technological, operational, and financial milestones still to be achieved for the 300MW utility-scale plant. Barclays' stance is cautious, expressing interest in seeing further advancements in the plant's development before fully committing.
The company's leadership under energy veteran Dan Rice, known for his successful ventures in both traditional and new energy sectors, adds credibility to NET Power's endeavors. Additionally, strategic partnerships with industry players such as Baker Hughes and Occidental (NYSE:OXY) are highlighted as key factors in the company's potential success.
The $13 price target set by Barclays is based on a net asset value (NAV) of a deployment schedule. This forecast includes the deployment of one plant in 2028, three plants in 2029, and eight plant deployments annually from 2030 through 2040. Barclays' initiation with an Equalweight rating reflects a balanced view of the company's prospects, considering both the innovative technology it offers and the challenges it faces.
InvestingPro Insights
As NET Power Inc. (NYSE: NPWR) forges ahead with its groundbreaking power generation technology, recent data from InvestingPro provides a snapshot of the company's financial health and market performance. Notably, NET Power holds more cash than debt on its balance sheet, which is a positive sign for investors considering the company's capital-intensive technology development. This aligns with the cautious optimism expressed by Barclays in their recent coverage initiation.
InvestingPro data further reveals that NET Power's gross profit margins have been under pressure, with a gross profit margin of -532.57% for the last twelve months as of Q4 2023. This could be of concern to investors given that the company is not expected to be profitable this year, as echoed in one of the InvestingPro Tips. On the market front, despite a challenging six-month period, the stock has seen a strong return over the last month, potentially indicating growing investor confidence or speculative interest in the stock's future prospects.
For those seeking more comprehensive analysis and additional recommendations, there are 10 more InvestingPro Tips available for NET Power, which can be accessed through the InvestingPro platform. Interested readers can utilize the coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription, offering a deeper dive into NET Power's financials and market potential.
InvestingPro data also indicates a market capitalization of $2.34 billion and a challenging P/E ratio of -5.83, reflecting the company's current lack of earnings. With the next earnings date set for April 23, 2024, investors and analysts alike will be keen to monitor NET Power's progress as it works towards its technological and operational milestones.
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