What happened

Shares of NextDecade (NEXT -0.41%) catapulted more than 53% by 10:30 a.m. EDT on Tuesday. Fueling the liquefied natural gas (LNG) stock was another analyst upgrade. That's its second one in the last two days, helping propel shares by more than 100% this week.

So what

An analyst from Evercore ISI upgraded NextDecade from in-line to outperform. The analyst also boosted their price target from $3 per share to $9, implying more than 65% upside, even after today's rally. 

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Image source: Getty Images.

Fueling that upgrade is the analyst's increasingly bullish view of the LNG market, which they see shifting in favor of developers along the U.S. Gulf Coast. The analyst noted that buyers are increasingly signing new long-term LNG purchase agreements. That could enable NextDecade and rival Tellurian (TELL -0.92%) to secure enough new contracts to move forward with their LNG development projects.

Tellurian has already signed two sizable deals in recent weeks, putting it close to approving its Driftwood LNG project. Meanwhile, NextDecade's Rio Grande LNG project should also be able to secure contracts, given its focus on producing low-carbon LNG.

Now what

After many years, it appears as if NextDecade will finally be able to move forward with its Rio Grande project, thanks to improving LNG market conditions. The facility has the potential of generating a significant amount of future cash flows for the company once complete. That upside suggests the stock could have more room to run, especially if it can sign enough purchase agreements to officially sanction the project.