On Thursday, Mizuho Securities adjusted its valuation of Coterra Energy (NYSE:CTRA), modifying the stock's price target to $34 from the previous $35, while reaffirming a Buy rating. The revision follows a reassessment of the company's net asset value (NAV) model based on year-end 2023 reserves and the guidance provided for 2024.
Coterra Energy reportedly surpassed its oil and total volume guidance for the year 2023, with capital expenditures (capex) landing at the midpoint of the projected budget. During the announcement of its fourth-quarter 2023 earnings, the company highlighted enhanced capital efficiencies anticipated in the 2024 budget and its three-year outlook.
The company has projected an approximate 5% compound annual growth rate (CAGR) in oil production and stable natural gas volumes for the forthcoming years. The expected total capex is about 10% lower than the previous three-year guidance. Coterra Energy's net debt to EBITDA ratio was notably low at approximately 0.1 times at the end of 2023, and the firm has been recognized for its leading cash return framework among peers.
Despite the price target reduction, Mizuho's valuation indicates that Coterra's stock continues to trade at a modest discount compared to its large-cap exploration and production (E&P) counterparts.
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