Investment research firm Jefferies cut Ormat Technologies (NYSE: ORA) to a Hold rating on Friday, while simultaneously increasing its price target to $130.00 from $125.00. The stock was quoted at $120.40 at the time of the report, trading close to its 52-week high of $132.58. InvestingPro data noted the shares were trading at a price-to-earnings ratio of 55.6, a level the data provider characterized as substantially above a conventional notion of fair value.
Jefferies said that the market has likely baked in a substantial portion of Ormat’s prospective gains tied to enhanced geothermal systems, or EGS, and the company’s nascent data-center electricity sales. That view came even as the firm reiterated a generally bullish stance on the geothermal energy sector as a whole, citing factors such as inflation in power purchase agreements and rising U.S. power demand.
The analyst house pointed to Ormat’s impressive market performance over recent periods as context for the change in recommendation. The shares have appreciated roughly 92.5% over the last 12 months and climbed about 34.9% during the prior six months, trends Jefferies suggested may have already captured much of the conceivable upside.
Investors were advised to focus on a handful of operational and guidance items that Jefferies views as key to Ormat’s medium-term returns. These include the company’s guidance for EBITDA in 2026, its announced capacity expansion program through 2028, and the timetable for EGS deployment after 2030 - a post-2030 EGS rollout the firm described as slower compared with some competitors.
Jefferies analyst Julian Dumoulin-Smith is quoted as saying that questions remain about how returns will improve and how extensive Ormat’s EGS expansion will ultimately be. Those uncertainties were cited as reasons for moving the rating to Hold even though the price target was modestly raised.
Operationally, Ormat has recorded notable recent developments. The company was awarded the Telaga Ranu Geothermal Working Area in Indonesia, a concession that Jefferies noted has the potential capacity to support up to 40 megawatts of geothermal power. The concession fits within Indonesia’s energy transition plan to displace diesel-fired generation with renewables by 2030.
In the United States, Ormat signed a 20-year power purchase agreement with data center operator Switch, representing the company’s first direct PPA with a data center operator. Under that agreement, approximately 13 megawatts of geothermal energy sourced from Ormat’s Salt Wells facility in Nevada will be supplied, with deliveries slated to begin in 2030.
Market analysts reacted to these contract wins and to Ormat’s recent financial performance. TD Cowen upgraded its rating on Ormat from Hold to Buy, citing growth potential tied to new data center contracts. Separately, Jefferies had previously raised its price target to $125 and maintained a Buy rating after Ormat reported strong third-quarter results. Those results showed revenue beating expectations by 6% and adjusted EBITDA outpacing estimates by 2%, driven by solid performance in the Storage and Product segments.
Overall, the newest Jefferies action reflects a cautious recalibration rather than a negative verdict on geothermal fundamentals. The firm’s analysts remain constructive about broader sector dynamics while urging close attention to company guidance and the pace and economics of future EGS deployments.