EQT Corp. (EQT) Valuation Update - Apr 25
Posted: Thu Apr 25, 2024 10:58 am
At the time of this post EQT was trading for $39.76.
TipRanks: "In the last 3 months, 18 ranked analysts set 12-month price targets for EQT. The average price target among the analysts is $43.41. The 18 price targets range from $34 to $60 per share."
As previously posted, EQT's Q1 results beat my forecast by a wide margin. Plus, the beat was in the best place, Adjusted Operating Cash Flow, because my stock valuations are based primarily on operating CFPS.
My valuation increases by $3.25 to $45.00 per share.
EQT's realized natural gas price was $3.08/mcf in Q1. Looking forward I have lowered my differential for ngas from $0.50 to $0.25 per mcf and I am using a positive $0.15/mcf for their Btu uplift.
EQT's production will be down ~10% from Q1 to Q2 because they are voluntarily choking back their production; keeping it in the ground to sell at higher prices in the future.
Based on my forecast, EQT should generate ~$700 million of free cash flow this year.
The big unknown is what the impact will be of the all-stock merger with Equitrans Midstream (ETRN) that is expected to close late in 2024. I've attempted to show the impact in my 2025 forecast. It should add over $2 billion of revenue and over $1 billion of operating cash flow.
Bottomline: If natural gas prices do rebound to over $3.00/MMBtu in 2025, EQT is going to be a very profitable company, which is why it is one of the "Elite Eight" in our Sweet 16 Growth Portfolio.
The "Elite Eight" are highlighted in yellow on the Sweet 16 Summary Spreadsheet which is update each week. You can find it under the Sweet 16 tab on our website.
TipRanks: "In the last 3 months, 18 ranked analysts set 12-month price targets for EQT. The average price target among the analysts is $43.41. The 18 price targets range from $34 to $60 per share."
As previously posted, EQT's Q1 results beat my forecast by a wide margin. Plus, the beat was in the best place, Adjusted Operating Cash Flow, because my stock valuations are based primarily on operating CFPS.
My valuation increases by $3.25 to $45.00 per share.
EQT's realized natural gas price was $3.08/mcf in Q1. Looking forward I have lowered my differential for ngas from $0.50 to $0.25 per mcf and I am using a positive $0.15/mcf for their Btu uplift.
EQT's production will be down ~10% from Q1 to Q2 because they are voluntarily choking back their production; keeping it in the ground to sell at higher prices in the future.
Based on my forecast, EQT should generate ~$700 million of free cash flow this year.
The big unknown is what the impact will be of the all-stock merger with Equitrans Midstream (ETRN) that is expected to close late in 2024. I've attempted to show the impact in my 2025 forecast. It should add over $2 billion of revenue and over $1 billion of operating cash flow.
Bottomline: If natural gas prices do rebound to over $3.00/MMBtu in 2025, EQT is going to be a very profitable company, which is why it is one of the "Elite Eight" in our Sweet 16 Growth Portfolio.
The "Elite Eight" are highlighted in yellow on the Sweet 16 Summary Spreadsheet which is update each week. You can find it under the Sweet 16 tab on our website.