EQT Corp (EQT) Valuation Increase - April 28
Posted: Thu Apr 28, 2022 3:05 pm
At the time of this post EQT was trading at $41.27.
I listened to the Company's Q1 conference call this morning and I have updated my forecast/valuation model for their strong Q1 results (adjusted operating cash flow of $888.5 million / $2.43 per share) and for their detailed guidance. My valuation increases by $9 to $59/share.
Thanks to some Bad Hedges, EQT's realized natural cash price including cash settlements on their hedges was only $2.97/mcf in Q1. However, the big spike in their realized liquids prices caused a $0.46/share increase in their operating cash flow quarter-over-quarter. With the amount of their unhedged gas increasing as we move through the year, EQT should generate more than $4.6 billion of operating cash flow in 2022 and more than $3 billion of FCF from operations.
There has been a structural change in the U.S. natural gas market that is taking America from being over-supplied with cheap gas to being under-supplied. Combined with much higher coal prices, natural gas prices in 2H 2022 and through 2023 could be much higher than what I am assuming in all of my forecast models. NGL prices are going to more than a double from 2021.
TipRanks: "In a report released today, Gabriele Sorbara from Siebert Williams Shank & Co maintained a Buy rating on EQT (EQT – Research Report), with a price target of $60.00. EQT has an analyst consensus of Strong Buy, with a price target consensus of $52.50, representing a 33.1% upside. In a report issued on April 21, Piper Sandler also maintained a Buy rating on the stock with a $58.00 price target. According to TipRanks.com, Sorbara is a 5-star analyst with an average return of 11.2% and a 44.0% success rate."
I listened to the Company's Q1 conference call this morning and I have updated my forecast/valuation model for their strong Q1 results (adjusted operating cash flow of $888.5 million / $2.43 per share) and for their detailed guidance. My valuation increases by $9 to $59/share.
Thanks to some Bad Hedges, EQT's realized natural cash price including cash settlements on their hedges was only $2.97/mcf in Q1. However, the big spike in their realized liquids prices caused a $0.46/share increase in their operating cash flow quarter-over-quarter. With the amount of their unhedged gas increasing as we move through the year, EQT should generate more than $4.6 billion of operating cash flow in 2022 and more than $3 billion of FCF from operations.
There has been a structural change in the U.S. natural gas market that is taking America from being over-supplied with cheap gas to being under-supplied. Combined with much higher coal prices, natural gas prices in 2H 2022 and through 2023 could be much higher than what I am assuming in all of my forecast models. NGL prices are going to more than a double from 2021.
TipRanks: "In a report released today, Gabriele Sorbara from Siebert Williams Shank & Co maintained a Buy rating on EQT (EQT – Research Report), with a price target of $60.00. EQT has an analyst consensus of Strong Buy, with a price target consensus of $52.50, representing a 33.1% upside. In a report issued on April 21, Piper Sandler also maintained a Buy rating on the stock with a $58.00 price target. According to TipRanks.com, Sorbara is a 5-star analyst with an average return of 11.2% and a 44.0% success rate."