Goldman Sachs likes EQT, CTRA and RRC - May 24

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dan_s
Posts: 34964
Joined: Fri Apr 23, 2010 8:22 am

Goldman Sachs likes EQT, CTRA and RRC - May 24

Post by dan_s »

Note from Goldman Sachs this morning:

Given our expectations for a less robust commodity price environment in 2024, we continue to favor producers with (1) more resilient FCF even at low gas prices; and (2) strong balance sheets, which can allow for more attractive share repurchases. These favor Buy-rated EQT and CTRA — both companies have low FCF breakeven relative to other peers, strong balance sheets (CTRA has $1 bn of cash on its balance sheet), and EQT/CTRA trade at 13%/11% average FCF yield over the next 4 years vs. natural gas E&Ps at 10%.

Rating Changes
We upgrade RRC to Neutral (from Sell) given its (1) low FCF breakeven, and (2) attractive hedges in 2023/24, which lends the shares more defensive characteristics given our gas price expectations, but see less compelling valuation (10% FCF yield at $3.50/MMBtu Henry Hub gas prices vs. peers at 10%) following the relative outperformance YTD.
Last edited by dan_s on Thu May 25, 2023 12:39 pm, edited 1 time in total.
Dan Steffens
Energy Prospectus Group
Fraser921
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Joined: Mon Mar 22, 2021 11:48 am

Re: Goldman Sachs likes EQT, CTRA and RRC - May 24

Post by Fraser921 »

>resilient FCF. That is key, I'm not interested if they are not generating cash
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