NextDecade (NASDAQ: NEXT) Plunges 1.23% on Morgan Stanley Downgrade and LNG Project Delays

NextDecade (NASDAQ: NEXT) fell 1.23% on Thursday, marking its second consecutive day of declines and a 7.46% drop over the past two trading days. The stock reached an intraday low not seen since April 2025, with a 2.45% single-day pullback, reflecting growing investor concerns over the company’s financial and operational outlook.

The recent sell-off was fueled by a downgrade from Morgan Stanley, which cut its price target to $10 from $15 per share. Analysts highlighted risks tied to NextDecade’s LNG project timelines, particularly delays in securing funding for the Rio Grande LNG terminal’s Train 4. The project’s $6.7 billion financing package, announced in early September, came after months of uncertainty, eroding confidence in the company’s ability to meet development milestones. Similar delays for Train 5, expected to finalize funding in Q4 2025, have compounded worries about cash flow and project execution.

Financial metrics further underscored the company’s challenges. NextDecade reported a -27.46% EBIT margin and a -40.6% return on equity, alongside a debt-to-equity ratio of 2.77 and a current ratio of 0.70. These figures raised questions about liquidity and debt sustainability, especially as the firm seeks to expand its LNG infrastructure. Analysts also criticized the company’s reliance on optimistic margin assumptions in its financial models, which appear misaligned with current market realities.

Analyst sentiment remained divided, with some firms upgrading the stock while others reduced price targets. Morgan Stanley and TD Cowen cited valuation concerns, while Cowen and Seaport maintained bullish ratings. Institutional ownership at 66.74% added a layer of complexity, as large investors’ positions could amplify short-term volatility. Meanwhile, insider transactions, including CEO Matthew Schatzman’s recent share purchase, failed to counter broader market pessimism.

Broader LNG sector dynamics also weighed on the stock. Oversupply and weaker-than-expected demand growth have dampened price expectations, challenging NextDecade’s long-term profitability assumptions. The company’s reliance on fixed-price contracts with buyers like JERA and ConocoPhillips offers some stability but limits flexibility in a shifting market. As the sector grapples with regulatory and environmental hurdles, NextDecade’s ability to execute its expansion plans will remain a critical factor in restoring investor confidence.