On Monday, Truist Securities revised its price target for EQT Corporation (NYSE:EQT), the largest natural gas producer in the United States, reducing it to $32 from the previous $36 while keeping a Hold rating on the stock.
The adjustment by Truist Securities comes after the firm updated its financial model, incorporating revised price assumptions and updated forecasts for the years 2024, 2025, and 2026. This new price target is based on two equally weighted methodologies.
The first method applies an enterprise value to EBITDAX (EV/EBITDAX) multiple of 5.5x, which is above the peer average of 4.1x, to the firm’s estimated 2025 EBITDAX of $5,661 million. This estimate is slightly higher than the consensus estimate of $5,579 million for the same period.
The second valuation method used by Truist Securities is based on a free cash flow to enterprise value (FCF/EV) yield assumption of 10.0%. This dual-approach valuation reflects a comprehensive analysis of EQT Corporation's financial prospects.
The updated price target suggests a more cautious outlook on EQT Corporation's share value, as the market continues to assess the company's financial performance and position in the energy sector. Investors and stakeholders in EQT Corporation will be monitoring the company's progress as it aims to meet the financial targets and operational goals reflected in the revised forecasts.
In other recent news, EQT Corporation has made significant strides in the natural gas industry. The company has completed its acquisition of Equitrans Midstream (NYSE:ETRN) Corporation, a move that could generate over $425 million in annual synergies and enhance the economics of EQT's approximately 4,000 drilling locations. The merger has already resulted in nearly $150 million in savings, according to EQT's CEO, Toby Z. Rice.
In addition, EQT reported a total gain on derivatives of $61 million for the second quarter of 2024, with net cash settlements on derivatives amounting to $298 million. This financial performance has led to multiple analyst updates. Deutsche Bank (ETR:DBKGn) downgraded EQT AB (ST:EQTAB) stock from a Buy to a Hold rating, while Jefferies increased the price target for EQT Corp. to $48.00, reflecting an improved 2025 production outlook.
InvestingPro Insights
As Truist Securities revises its outlook on EQT Corporation, investors are keen to understand the underlying metrics that could influence the stock's performance. According to InvestingPro data, EQT boasts a substantial market capitalization of $15.8 billion and a P/E ratio of 23.05, reflecting investor expectations of future earnings. Notably, the company's revenue for the last twelve months as of Q1 2024 stands at $4.42 billion, despite a significant revenue decline of over 61% during the same period. This could be indicative of challenging market conditions or operational headwinds.
InvestingPro Tips reveal that EQT is expected to remain profitable this year, which aligns with the positive sentiment on the company's ability to navigate the current economic environment. However, analysts have revised their earnings downwards for the upcoming period, potentially signaling caution. Additionally, the company trades with low price volatility, which might appeal to investors seeking stability in their portfolios. For those interested in further insights, InvestingPro offers additional tips on EQT, which can be accessed with a subscription. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and explore the wealth of analysis available, including 5 more InvestingPro Tips for EQT.
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