Why 2 Natural Gas Stocks Get Mixed Reception From JPMorgan Analyst
Portfolio Pulse from Priya Nigam
JPMorgan analyst Arun Jayaram adjusted ratings for two natural gas stocks, upgrading Antero Resources (AR) to Overweight with a price target of $30, citing its low gas price breakeven and nearly unhedged position in 2024+. EQT Corp (EQT) was downgraded to Neutral with a price target of $37, following its $5.4 billion merger with Equitrans Midstream (ETRN), which includes assuming $7.5 billion of debt. This merger is seen as a move to lower EQT's cost structure amid expected volatility but may delay shareholder returns due to the debt target.
March 20, 2024 | 8:36 pm
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POSITIVE IMPACT
Antero Resources upgraded to Overweight by JPMorgan with a price target of $30, highlighted for its advantageous position in a high natural gas price environment.
The upgrade reflects Antero Resources' strong positioning in the natural gas market, with low breakeven costs and minimal hedging for 2024+, making it a favorable choice for investors anticipating higher natural gas prices.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 90
NEUTRAL IMPACT
Equitrans Midstream's merger with EQT Corp includes the assumption of $7.5 billion in debt, potentially impacting its financial structure and stock performance.
While the merger is aimed at reducing EQT's cost structure, the significant debt assumption by Equitrans Midstream could introduce financial strain and uncertainty, potentially affecting its stock performance in the short term.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 70
NEGATIVE IMPACT
EQT Corp downgraded to Neutral by JPMorgan with a price target of $37 following its merger with Equitrans Midstream, which includes a significant debt assumption.
The downgrade is based on the recent merger with Equitrans Midstream, adding substantial debt to EQT's balance sheet. This move is expected to delay potential cash returns to shareholders, impacting the stock's short-term attractiveness.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90