Range Resources (RRC) Update - Dec 28

[dan_s]

Range Resources is one of the five large-cap gassers in the Sweet 16. At the time of this post, RRC is trading at $18.86.
First Call's price target is $26.62
Since the Company announced Q3 results, ten analysts have submitted updated price targets to TipRanks that range between $22 and $35, with an average price target of $28.30.

I have adjusted my forecast model for RRC to base it on HH gas prices of $4.25 in Q4 2021 and $3.50 for 2022. Since Range had ~76% of their Q4 gas hedged, the change only had a slight impact on my Q4 EPS and operating cash flow per share forecasts.

My valuation for RRC declines by $1.50 to $28.50, but it remains one of my Top Picks for those of you that want to add more exposure to natual gas and NGL prices. Since most of their "Bad Hedges" expire on 12/31/2021, Range should report outstanding Q1 2022 results. Q1 operating cash flow should come close to funding their entire 2022 D&C CapEx budget. Range is a "Cash Flow Machine" that deserves a higher share price.

My 2022 operating cash flow per share forecast of $6.26 compares to TipRanks' CFPS forecast of $5.93. 6X CFPS is a reasonable 12-month price target.