On Thursday, Stephens, a financial services firm, updated its valuation of Expand Energy (NASDAQ:EXE), increasing the stock's price target to $85.00 from the previous $84.00. The firm has decided to maintain an Equal Weight rating on the shares.
The adjustment comes after an analysis of Expand Energy's third-quarter performance. The company's production estimate for the quarter was 2.62 billion cubic feet per day (Bcfpd), which is consistent with the midpoint of their provided guidance. This figure represents a 5% decrease from the previous quarter and a significant 25% drop compared to the same period last year.
The decline is attributed to the company's strategy of building drilled but uncompleted wells (DUCs) and deferring the transition to the production of new wells (TILs).
Expand Energy is expected to have 1.0 Bcfpd of capacity offline at the end of 2024. Analysts anticipate that despite potential improvements in natural gas prices next year, some of this capacity will remain offline through the first and possibly second quarter of 2025.
During the third quarter of 2024, a blackout period associated with the merger between Chesapeake Energy (NYSE:CHK) and Southwestern Energy (NYSE:SWN) likely prevented any share repurchases by Expand Energy. The merger, which was completed on October 1, 2024, led to the rebranding of the company as Expand Energy (EXE).
The upcoming conference call is expected to provide further insights into management's plans to activate deferred TILs, outline potential activities for 2025, discuss the integration process of SWN, and comment on the current state of natural gas markets. The slight increase in the target price reflects a fine-tuning of the company's net asset value (NAV) per share.
In other recent news, Mizuho Securities has maintained its Outperform rating on Expand Energy Corporation, with a price target of $105. The rating is based on the company's projected third-quarter 2024 call and its recent deal with SWN.
Mizuho anticipates that Expand Energy's 2025 plan will be influenced by the natural gas market conditions and could increase its production volumes by about 5% with roughly 8% less capital expenditure than the current consensus among analysts.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Expand Energy's (NASDAQ:EXE) financial position and market performance. The company's market capitalization stands at $11.35 billion, with a P/E ratio of 25.77, suggesting a moderate valuation relative to earnings. Despite the production declines mentioned in the article, Expand Energy has maintained profitability, with InvestingPro data showing the company has been profitable over the last twelve months.
InvestingPro Tips highlight that Expand Energy operates with a moderate level of debt and its liquid assets exceed short-term obligations, which could provide financial flexibility as the company navigates the integration of Southwestern Energy and manages its production strategy. The stock has shown a strong return over the last month, with a 17.89% price total return, potentially reflecting market optimism about the recent merger and future prospects.
However, aligning with the article's discussion on production declines, InvestingPro Tips indicate that analysts anticipate a sales decline in the current year. This expectation is corroborated by the reported revenue growth of -61.69% over the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Expand Energy, providing a deeper understanding of the company's financial health and market position.
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