ETRN - EQT: Cementing Position As Low-Cost Gas Producer (Raising Target Price)
2024-05-08 02:29:20 ET
Summary
- EQT Corp.'s stock has increased by 18.7% since February 16th, outperforming the SPDR S&P Oil & Gas Exploration & Production ETF.
- EQT updated its 2024 guidance and announced the acquisition of Equitrans Midstream, which could lower its free cash flow breakeven to below $2/MMBtu in 2025.
- I'm raising my target price for EQT stock to $56 based on updated free cash flow projections and the potential benefits of the Equitrans acquisition.
- The natural gas futures curve and calendar strip prices drive value for gas producers more than the front-month futures price.
I last wrote about Marcellus gas producer EQT Corp. ( EQT ) on February 16 th in EQT: “ The Low-Cost gas Producer is a Buy ,” rating the stock a strong buy and calculating a target price of $51 for the stock based on a discounted cash flow model.
The stock is up about 18.7% including dividends paid since that article was published. According to Bloomberg, EQT has outperformed the widely followed SPDR S&P Oil & Gas Exploration & Production ETF ( XOP ) by a little over 7 percentage points over an equivalent period.
Since my last piece, EQT updated its 2024 guidance on their Q1 2024 call, which I’ll cover in this article. Even more important, EQT announced a transformational deal to acquire pipeline and water infrastructure provider Equitrans Midstream ( ETRN ) in March, which could dramatically lower EQT’s free cash flow breakeven to below $2/MMBtu in 2025....
EQT: Cementing Position As Low-Cost Gas Producer (Raising Target Price)