On Wednesday, Roth/MKM maintained a Neutral stance on shares of Range Resources (NYSE:RRC), with a steady price target of $35.00. The firm adjusted its cash flow per share (CFPS) forecasts for the company, citing enhanced production and reduced costs as the driving factors. For the year 2024, the CFPS estimate has been increased by 1.5%, while the 2025 projection has seen a 1% uplift, both attributed to lower operational expenses.
Range Resources has actively managed its financial obligations, repurchasing $47.9 million of its bonds during the second quarter of 2024. This move comes in contrast to the first quarter, where no buybacks occurred.
Moreover, the company bought back 600,000 of its own shares at an approximate price of $33.42 each, totaling $20.1 million. Despite these repurchases and an acceleration in free cash flow, Range Resources has not committed to a significant share buyback program.
The company's strategy indicates a desire for medium-term production growth, with plans to potentially increase volumes in the latter half of 2025 or even in 2026, contingent on favorable market conditions. Range Resources is currently operating above maintenance levels, suggesting a readiness to scale up production when the time is right.
In terms of market valuation, Range Resources is trading at a premium compared to its industry peers. Based on Roth/MKM's $3.00 per Mcf Henry Hub gas forecast for 2025, the company's shares are valued at a 7.1x multiple of the firm's 2025 discounted cash flow estimate. Additionally, Range Resources' free cash flow yield for 2025 is projected to be 8%, aligning with the average of its competitors.
In other recent news, Range Resources Corporation (NYSE:RRC) received an updated price target from Mizuho Securities, raising it to $47.00 from $46.00, while maintaining an Outperform rating for the stock. This follows the company's slightly better than predicted second quarter of 2024 performance and operational improvements. The company anticipates production volumes to reach the upper end of the forecasted range, indicating potential for modest sequential growth.
In addition, Range Resources reported mixed derivative results for Q2, with a substantial non-cash fair value loss, but also a net cash receipt from derivative settlements. Multiple firms including JPMorgan, Jefferies, Piper Sandler, and Mizuho Securities adjusted their price targets for Range Resources, while RBC Capital Markets downgraded the stock from Outperform to Sector Perform, citing a weak natural gas market.
In further developments, JPMorgan increased its price target for Range Resources to $37.00, anticipating solid operational growth, while Jefferies raised its stock price target to $34.00 based on a higher expected realization from natural gas liquids (NGLs).
Similarly, Piper Sandler also increased its price target for Range Resources to $43.00, following better-than-expected first-quarter earnings due to a favorable liquids mix and improved NGL pricing. These recent developments reflect a positive outlook on the company's financial prospects for the remainder of the year.
InvestingPro Insights
In light of Roth/MKM's neutral outlook on Range Resources (NYSE:RRC), it's valuable to consider additional insights from InvestingPro. The company's stock price has shown resilience, trading at 82.1% of its 52-week high, with a previous close at $33.09. This aligns with the InvestingPro Tip that the stock generally trades with low price volatility.
Furthermore, Range Resources operates with a moderate level of debt, which could be a factor in the company's ability to manage financial obligations effectively, as seen in its recent bond repurchases.
From a valuation perspective, Range Resources currently holds a market capitalization of $7.79 billion and trades at a P/E ratio of 16.2, which adjusts to 13.8 for the last twelve months as of Q1 2024. This could be indicative of the company's high revenue valuation multiple, another InvestingPro Tip to consider. It is worth noting that analysts predict the company will be profitable this year, and it has been profitable over the last twelve months, supporting Roth/MKM's positive CFPS forecast adjustments.
For readers looking to delve deeper into Range Resources' financials and market performance, InvestingPro offers additional tips and metrics. With the use of coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to a wealth of investment analysis tools and insights. There are 5 more InvestingPro Tips available for Range Resources, which could further inform investment decisions.
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