Mizuho Securities has adjusted its outlook on EQT Corporation (NYSE: NYSE:EQT (ST:EQTAB)), a player in the natural gas sector, by reducing its price target to $41 from the previous $43.
The firm has also reaffirmed its Neutral rating on the company's stock. This revision comes amid expectations of a slight underperformance in EQT's third-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA), which is anticipated to fall short of the consensus by approximately 4%.
The shortfall is attributed to weaker gas pricing, particularly in the local Appalachia market, which is believed to have largely negated the impact of the company's strong operational performance.
Mizuho's evaluation indicates that EQT could stand to benefit as the outlook for the gas market, especially regarding the sentiment on gas prices for 2025, shows signs of improvement. However, the firm underscores the importance of EQT's execution in reducing its debt and capturing synergies from its recent integration with the midstream sector.
The management at EQT has expressed confidence in its strategy to decrease debt following the Equitrans transaction, aiming to generate over $5 billion through asset sales and organic free cash flow.
In other recent news, EQT Corp has seen significant developments. Citi upgraded EQT Corp from Neutral to Buy, citing growth potential through asset sales and debt reduction. This move comes amid expectations of a tightening U.S. gas market by 2025.
In addition, JPMorgan raised its price target on EQT Corp, maintaining an Overweight rating due to confidence in the company's deleveraging strategy. The firm expects EQT to successfully complete the sales of its non-operational exploration and production assets and regulated midstream assets by year-end, generating approximately $4.5 billion in cash.
On the other hand, EQT Corp announced a significant workforce reduction following its acquisition of Equitrans Midstream (NYSE:ETRN) Corporation. This action is expected to result in a 15% cut in the company's employee base, leading to pre-tax charges between $165 million to $185 million. The reduction aims to eliminate roughly $80 million in annualized general and administrative costs.
Analyst firms have also adjusted their stances on EQT Corp. Wells Fargo upgraded EQT Corp's stock from Equal Weight to Overweight, following the successful merger with Equitrans and the company's strong quarterly performance. However, Piper Sandler adjusted its stance from Overweight to Neutral, reflecting changes in long-term natural gas price assumptions.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on EQT Corporation's financial position and market performance. The company's market capitalization stands at $22.38 billion, with a P/E ratio of 22.43. This valuation metric aligns with an InvestingPro Tip indicating that EQT is "Trading at a high earnings multiple," which investors should consider in the context of Mizuho's revised price target.
Despite the challenges in gas pricing noted by Mizuho, EQT has shown resilience in its stock performance. InvestingPro data reveals a strong 15.34% return over the last month, suggesting investor optimism despite the anticipated EBITDA shortfall. This positive momentum is further supported by an InvestingPro Tip highlighting EQT's "Strong return over the last five years."
Looking ahead, analysts remain cautiously optimistic about EQT's profitability. An InvestingPro Tip notes that "Analysts predict the company will be profitable this year," which could be crucial as the company works towards its debt reduction goals mentioned in Mizuho's analysis.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for EQT, providing a deeper understanding of the company's financial health and market position.
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