CTRA - Coterra Energy upgraded Antero downgraded as J.P. Morgan shuffles gas names

2023-06-27 12:44:46 ET

Coterra Energy ( NYSE: CTRA ) +1.7% in Tuesday's trading as J.P. Morgan upgraded the natural gas producer to Overweight from Neutral with a $31 price target, while Antero Resources ( NYSE: AR ) edges slightly into the green from earlier losses as the bank downgraded the stock to Neutral with a $30 PT.

"In an environment where most E&Ps are focused on sustaining capex programs, we think the market will significantly reward companies that can deliver outsized volumes," said JPM analysts led by Arun Jayaram, noting the positive reaction to SM Energy's ( SM ) pre-announcement of nearly 2% higher full-year volumes at 4.5% lower capex .

The analysts said they viewed Coterra's ( CTRA ) commentary at JPM's energy conference last week as the most positive in its coverage group, and expects the company "will come in well within its capex guide for this year and expect to see a greater impact in 2024 as the company is able to renegotiate its contracts at lower leading edge rates."

The JPM group said it remains favorable to Antero Resources ( AR ) in the longer term given its clean balance sheet and leverage to better gas fundamentals in 2024-25, the stock merits a downgrade for now on relative valuation and as propane prices have fallen.

More on Coterra Energy:

• Financial and valuation comparison to sector peers
• Analysis: Coterra Energy: Shifting Outlook From Doubt To Bullish
• Stock price target: Up 5% YTD, down 6% in the past 12 months

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