On Friday, Bernstein initiated coverage on EQT Corp. (NYSE:EQT (ST:EQTAB)), the United States' leading producer of low-cost natural gas, with a Market Perform rating and a price target set at $50.00. With a market capitalization of $26.5 billion and trading near its 52-week high of $48.02, InvestingPro analysis suggests the stock is currently overvalued. The research firm emphasized EQT's substantial inventory and its strategic approach to production and transportation in the Appalachian region.
EQT's business model relies on commanding a large inventory of cost-effective gas and producing at scale, approximately 6 billion cubic feet per day, which equates to around 1 million barrels of oil per day. With last twelve months revenue of $4.62 billion and a gross profit margin of 50.35%, the company has demonstrated strong operational efficiency.
This production feeds into a constrained basin where EQT strategically manages takeaway capacity. The firm also noted EQT's environmental, social, and governance (ESG) metrics, highlighting its low greenhouse gas (GHG) intensity, which is nearing zero for Scope 1 and 2 emissions. InvestingPro subscribers can access detailed financial health metrics and 12 additional ProTips for comprehensive analysis.
Bernstein's assessment comes at a time when the Henry Hub benchmark, a reference point for natural gas prices, is considered stable. The firm had been monitoring two significant events expected before the end of the year—the startup of the Matterhorn facility and the conclusion of the high-volume storage season—which could set a foundation for gas prices.
However, Matterhorn's launch at less than full capacity and a slow increase in the availability of liquefied natural gas (LNG) expected in 2025, alongside the potential return of Russian gas to the market, tempered the firm's optimism for a bullish outlook on gas prices.
Looking ahead, Bernstein acknowledges the current export constraints in the Appalachian region but anticipates the potential for positive change. New pipeline projects, such as the Mountain Valley Pipeline (MVP), MVP Southgate, and Transco Expansion, along with in-basin demand from data centers and the broader energy transition, could improve pricing. With analyst targets ranging from $32.41 to $56.00 and a consensus recommendation of 2.25, market sentiment remains cautiously optimistic. This unmodeled optionality suggests a possible future positive inflection point for EQT, although the firm projects that these developments are more likely to materialize over a 12-month or longer timeframe.
For deeper insights into EQT's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, EQT Corporation (NYSE:EQT) has been making significant strides in the natural gas sector.
The company has undergone a transformation following a merger with ETRN, leading to a reinstated coverage by RBC Capital Markets with a "Sector Perform" rating. EQT's merger has been a crucial step, turning it into an integrated Appalachian-focused natural gas company that continues to perform strongly.
EQT's recent joint venture agreement with Blackstone (NYSE:BX), involving the monetization of a part of its midstream assets for $3.5 billion, has been noted by Mizuho (NYSE:MFG), resulting in an increased price target for EQT Corp to $48.00. This deal has brought EQT's total cash proceeds from asset sales to $5.25 billion, moving it closer to its debt reduction goal of $7.5 billion by 2025.
In addition, EQT Corp reported robust third-quarter earnings, exceeding expectations due to increased production volumes and reduced capital expenditure. In response to these results, Piper Sandler adjusted EQT's stock price target to $34.00. EQT has also sold non-operated assets in Pennsylvania to Equinor for $1.25 billion, contributing to a projected $3.6 billion in total cash proceeds.
The company's successful integration of Equitrans Midstream (NYSE:ETRN) has realized annualized cost savings of $145 million, positioning EQT as a key player in the natural gas market. EQT anticipates increased natural gas demand due to coal retirements and data center growth, planning to maintain flat year-over-year sales volumes around 2,100 Bcfe for 2025.
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