Fervo Energy's (FRVO) geothermal energy projects were tagged by energy-focused software company Enverus with "overly aggressive" valuation cuts, RBC Capital Markets said in a note Wednesday.
The brokerage noted Fervo Energy stock's decline after Enverus applied a 26.5% to 51% valuation cut to the company's Cape Phase I to III and Corsac Phase I projects, citing elevated risk from water usage and thermal drawdown.
Concerns over water loss were overblown, given Fervo Energy's deeper wells and water's limited portion in a project's expenses, according to the note.
Enervus is also "over forecasting" the number of makeup wells required to support Cape Station's reservoir declines based on potentially aggressive well decline assumptions, the brokerage said.
RBC Capital Markets reiterated its outperform rating and $46 price target on Fervo Energy.
Price: $28.89, Change: $-0.34, Percent Change: -1.16%