Mizuho Securities has sustained its Outperform rating for Expand Energy Corporation (NASDAQ: EXE), maintaining a price target of $105.00. The firm's outlook is based on expectations set for the company's third-quarter 2024 call, which will likely focus on the capital outlook for 2025 following the recent closure of a deal with SWN.
The analyst from Mizuho anticipates that Expand Energy's 2025 plan will be influenced by the natural gas market conditions, suggesting that a strategic deployment of approximately 80 deferred Turn-In-Line (TIL) wells and around 35 Drilled but Uncompleted (DUC) wells from the 2024 standalone program could enable the company to increase its production volumes by about 5% with roughly 8% less capital expenditure than the current consensus among analysts.
It was noted that estimates might vary depending on whether they are adjusted for the SWN transaction. Additionally, the firm's projections do not account for the possibility of achieving 'excess' synergies beyond the $400 million forecasted in January.
The focus for Expand Energy in the near term is expected to be on reducing debt, but Mizuho highlighted the potential for underappreciated cash generation capabilities of the largest U.S. gas producer, especially considering the likelihood of higher gas prices in 2025. The analyst concluded by reiterating the Outperform rating and a price target of $105 per share for Expand Energy Corporation.
In other recent news, several U.S. and Canadian companies are undergoing significant workforce reductions amid economic uncertainty. Technology giant Cisco Systems (NASDAQ:CSCO) is eliminating 7% of its global workforce as part of a restructuring plan, while Amazon (NASDAQ:AMZN) is making substantial cuts across its units.
Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Intel (NASDAQ:INTC) are also reducing their staff numbers. In the media industry, Paramount Global is cutting 15% of its U.S. workforce ahead of its merger with Skydance Media. Financial services firms such as PayPal (NASDAQ:PYPL) Holdings, Citigroup, and Morgan Stanley are also planning layoffs.
Chesapeake Energy Corporation (NYSE:CHK) reported a Q2 net loss of $227 million, or $1.73 per share, a significant downturn from the profit of $391 million, or $2.73 per share, in the same period last year. The loss is attributed to the continued weak prices for natural gas, reflecting the broader economic conditions affecting the energy industry.
InvestingPro Insights
Recent data from InvestingPro adds depth to Mizuho's analysis of Expand Energy Corporation (NASDAQ:EXE). The company's market cap stands at $11.37 billion, with a P/E ratio of 25.93, suggesting investors are willing to pay a premium for EXE's earnings. This valuation aligns with Mizuho's optimistic outlook and Outperform rating.
InvestingPro Tips highlight that EXE is trading near its 52-week high and has shown a strong return over the last month, with a 19.71% price total return. This recent performance supports Mizuho's positive stance on the stock. Additionally, EXE operates with a moderate level of debt, which could be advantageous as the company focuses on debt reduction, as mentioned in the Mizuho report.
However, it's worth noting that 10 analysts have revised their earnings downwards for the upcoming period, and revenue growth has seen a significant decline of -61.69% in the last twelve months. These factors may impact the company's ability to achieve the production increase and capital expenditure reduction projected by Mizuho.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for EXE, providing a broader perspective on the company's financial health and market position.
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