Update shared on 12 Dec 2025
Fair value Increased 33%Analysts modestly trimmed their price target on Montauk Renewables to $4.00 from $4.50, citing lower RINs pricing tied to regulatory changes, higher maintenance capex, softer EBITDA growth, and increased cash burn.
Analyst Commentary
Bearish analysts highlighted that the reduced price target reflects a reassessment of Montauk Renewables valuation in light of a more challenging operating backdrop. While the latest quarterly results were broadly in line with expectations, the outlook for key revenue drivers and cash generation has become less favorable.
Bearish Takeaways
- Lower RINs pricing tied to recent regulatory changes is expected to pressure revenue and margins, leading bearish analysts to assign a lower valuation multiple.
- Higher than previously assumed maintenance capex raises concerns about free cash flow sustainability and limits flexibility for growth investments.
- Softer projected EBITDA growth suggests execution and demand risks, reducing confidence in Montauk Renewables ability to meet prior long term targets.
- Increased cash burn, even against in line quarterly results, heightens balance sheet and funding risk, reinforcing a more cautious stance on the stock.
What's in the News
- Updated full year 2025 guidance calls for RNG revenues of $150 million to $170 million, supported by projected RNG production volumes of 5.8 million to 6.0 million MMBtu (Key Developments).
- Renewable electricity production for 2025 is expected to range between 175,000 MWh and 180,000 MWh, with associated revenues of $17.0 million to $18.0 million, underscoring management's focus on diversified clean energy output (Key Developments).
- The company reported no share repurchases from July 1, 2025 to September 30, 2025, leaving its previously announced April 15, 2025 buyback authorization effectively unused (Key Developments).
Valuation Changes
- Fair Value has risen moderately, with the base case intrinsic value multiple increasing from 1.5x to 2.0x.
- Discount Rate has edged higher, moving from 7.66 percent to approximately 7.78 percent, implying a slightly higher perceived risk profile.
- Revenue Growth assumptions have increased significantly, from about 17.1 percent to roughly 25.4 percent, indicating a more optimistic top line outlook.
- Net Profit Margin expectations have fallen meaningfully, declining from around 7.3 percent to about 4.7 percent, signaling lower anticipated profitability per dollar of revenue.
- Future P/E multiple has expanded sharply, rising from about 12.3x to roughly 24.0x, suggesting the valuation now embeds higher growth and execution expectations.
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