EQT Stock Downgraded Despite Merger News: Analyst Says Hold Your Horses
Portfolio Pulse from Lekha Gupta
Mizuho Securities analyst Nitin Kumar downgraded EQT Corporation (NYSE:EQT) to Neutral from Buy, reducing the price target to $39 from $46, citing FY23 reserves, 2024 guidance, and the proposed merger with Equitrans Midstream Corporation (NYSE:ETRN). The merger, an all-stock transaction, aims to create a company with an enterprise value over $35 billion. EQT's Q4 revenue and adjusted EPS fell short of expectations, and FY24 guidance suggests modest dilution to NAV due to higher operating expenses. Kumar expects EQT to focus on debt reduction and asset integration, leading to potential cash returns, with a 2025 FCF breakeven of $2.20/mcf for the combined company.
March 13, 2024 | 6:01 pm
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POSITIVE IMPACT
Equitrans Midstream Corporation is set to merge with EQT Corporation in an all-stock transaction aimed at creating a combined company with an enterprise value over $35 billion.
The merger with EQT Corporation represents a significant strategic move for Equitrans Midstream Corporation, aiming to create a combined entity with a substantial enterprise value. This all-stock transaction is likely to be viewed positively by investors, as it promises to enhance the combined company's market position and financial strength, potentially leading to an increase in ETRN's stock price in the short term.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 80
NEGATIVE IMPACT
EQT Corporation downgraded to Neutral from Buy by Mizuho Securities, with a price target cut to $39 from $46, due to FY23 reserves, 2024 guidance, and merger plans with ETRN. Q4 earnings missed expectations, and FY24 guidance suggests higher operating expenses.
The downgrade and price target cut by Mizuho Securities reflect concerns over EQT's financial performance and the impact of the proposed merger with ETRN. The missed Q4 earnings and modest dilution to NAV due to higher operating expenses in FY24 guidance are likely to negatively impact investor sentiment and stock price in the short term.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100