Sempra signs Petrobras for 20 years, and five banks cut their targets anyway
The LNG arm landed its first South American customer and two build milestones; between October 12 and 15, five banks marked down what they think the shares are worth. The argument is timing: regulated earnings now, LNG cash from 2030.
Vincent Jiang · 3 min read
A 20-year customer, five colder targets
On September 14, Sempra−0.07% — Sempra, down 0.07 percent today Infrastructure, the LNG arm of Sempra (NYSE: SRE), a utility worth about $54 billion 2, signed Brazil's Petrobras−2.39% — Petrobras, down 2.39 percent today to a 20-year contract for about 0.8 million tonnes of LNG a year from Port Arthur Phase 2 in Texas, its first South American customer 12. The deal covers roughly 6% of the 13 million tonnes a year the project's two new trains are designed to produce 1.
Between October 12 and 15, five banks cut their targets: JPMorgan to $99 from $102 and Barclays+0.26% — Barclays, up 0.26 percent today to $90 from $103 on the 12th, BofA+0.80% — BofA, up 0.80 percent today to $88 from $101 and Truist+3.66% — Truist, up 3.66 percent today to $94 from $96 on the 14th, Goldman Sachs+1.06% — Goldman Sachs, up 1.06 percent today to $103 from $110 on the 15th 2345. The shares closed at $81.99 on October 14, down about 7% since January 3.
Five targets cut in four days, every one still above the $81.99 close
- Previous target
- New target
Data
| Previous target | New target | Change | |
|---|---|---|---|
| JPMorgan | $102 | $99 | -2.9% |
| Barclays | $103 | $90 | -12.6% |
| BofA | $101 | $88 | -12.9% |
| Truist | $96 | $94 | -2.1% |
| Goldman Sachs | $110 | $103 | -6.4% |
The build keeps its dates
The $1 billion, 72-mile Louisiana Connector entered service last month, sized for 2 billion cubic feet a day of feed gas into Port Arthur 6. On Mexico's Pacific coast, Energía Costa Azul, run by Sempra Infrastructure with TotalEnergies holding 16.6%, shipped its first cargo in July 78. Sempra then found damaged compressor equipment at the site and now expects full completion in the fourth quarter 9.
Port Arthur Phase 1, a $13 billion Bechtel build rated up to 13 million tonnes a year, finishes its two trains in 2027 and 2028 6. Phase 2, sanctioned in September 2025, adds two more of about the same size, with commercial operations due in 2030 or 2031 1. A 2025 scaffold collapse killed three workers and briefly suspended the site 6.
The regulated side pays today's bills
Today's earnings come from the regulated side: Oncor, the Texas transmission utility, plus Sempra's California gas and power operations 9. Second-quarter earnings rose to $796 million from $461 million a year earlier 29, and quarterly net income has climbed from $95 million in late 2025 to just over $1 billion in early 2026 10.
Net income climbed from a $95 million quarter to $1 billion
Data
| Net income | |
|---|---|
| Q3 '23 | $0.73B |
| Q4 '23 | $0.75B |
| Q1 '24 | $0.81B |
| Q2 '24 | $0.73B |
| Q3 '24 | $0.65B |
| Q4 '24 | $0.68B |
| Q1 '25 | $0.92B |
| Q2 '25 | $0.47B |
| Q3 '25 | $0.1B |
| Q4 '25 | $0.35B |
| Q1 '26 | $1.04B |
| Q2 '26 | $0.8B |
Behind the earnings, spending outran cash in the first half of 2026: capital projects consumed $2.2 billion to $2.5 billion a quarter against operating cash flow of $1.3 billion to $1.8 billion 10.
What decides it lands on October 30
The ratings survived the cuts. Truist kept its Buy while citing the political backdrop in Texas and California 5; the average analyst target sits about 20% above the share price, and none of 23 covering analysts rates the stock a Sell 11. Management said in August that both Port Arthur phases remain on time and on budget 9.
Petrobras starts paying when Phase 2 begins commercial operations in 2030 or 2031; all five target cuts landed within four days. The banks are repricing the wait for LNG cash rather than the plants. Sempra guides to $4.80 to $5.30 of adjusted 2026 earnings, pays a $0.6575 quarterly dividend today, and reports third-quarter results on October 30 29. Watch for Train 1 completion in 2027 and whether the next Phase 2 contract covers more than Petrobras's 6% 6.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
