EQNR - Equinor: Due For A Bounce But Mind The Gas (Rating Upgrade)

2024-03-10 21:15:43 ET

Summary

• Equinor got quite oversold and could bounce on the recent strength in oil prices.
• Longer term, I am still cautious about the further downside in European natural gas prices.
• Equinor will continue its cash returns in 2024, albeit at a reduced pace, but most of the cash pile reflects 2021-2022 windfall pricing and may not be replicable soon.

Investment thesis

Equinor ASA ( EQNR ) continues to impress with its capital returns, supported by this European major's sizable cash pile. The stock is also down 20% from my prior article , so I think my caution was justified:

As oil ( CL1:COM ) appears to be strengthening and EQNR got quite oversold, I am now betting on a small bounce to the $28-$30 area. However, unlike Equinor's management, I remain bearish on European natural gas, which in fact was one of the risk factors I flagged back in October....

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