On Thursday, JPMorgan (NYSE:JPM) analyst Arun Jayaram increased the price target on Range Resources shares (NYSE:RRC) to $40 from $37, while maintaining an Underweight rating on the company. The stock, currently trading near its 52-week high of $40.59, has demonstrated strong momentum with a 37.11% return over the past year.
According to InvestingPro data, eight analysts have recently revised their earnings expectations upward for the upcoming period, with price targets ranging from $22.13 to $47. Jayaram expects Range Resources to deliver a straightforward fourth quarter for 2024, with production and financial results that are projected to align with market expectations.
The company's anticipated fourth-quarter production is pegged at 2.20 billion cubic feet equivalent per day (Bcfe/d) with capital expenditures of $157 million. These figures are in line with the Street's estimate of 2.20 Bcfe/d and $156 million in capital expenditures. For natural gas, JPMorgan forecasts a realization of $2.33 per thousand cubic feet (Mcf), with a differential of $0.46 per Mcf below their Henry Hub benchmark price of $2.79 per Mcf.
In terms of liquids, Range Resources is expected to realize $26.47 per barrel for natural gas liquids (NGLs), which includes a $2.00 per barrel premium over Mont Belvieu pricing. The company is positioned advantageously at Marcus Hook, with the expectation that Gulf Coast export capacity will not see significant increases until the second half of 2025 or into 2026. This advantageous positioning is expected to support the company's global liquids fundamentals.
For the fourth quarter of 2024, JPMorgan estimates Range Resources will report earnings per share (EPS) and cash flow per share (CFPS) of $0.62 and $1.26, respectively. These figures surpass the Street's estimates of $0.58 for EPS and $1.14 for CFPS.
Additionally, the firm's estimate for earnings before interest, taxes, depreciation, amortization, and exploration expenses (EBITDAX) stands at $332 million, compared to the Street's estimate of $306 million.
With a current market capitalization of $9.73 billion and trailing twelve-month EBITDA of $1.12 billion, Range Resources trades at a P/E ratio of 20.17. InvestingPro's comprehensive analysis indicates the stock is currently trading above its Fair Value, with additional insights available in the Pro Research Report, which offers deep-dive analysis of 1,400+ US equities.
Range Resources' management strategy, which includes prudent hedging, is recognized for preserving free cash flow (FCF) generation in a challenging gas market. The company maintains a GOOD overall financial health score according to InvestingPro, which evaluates multiple factors including profitability, growth, and cash flow metrics.
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JPMorgan models $148 million in FCF before changes in working capital and approximately $78 million in hedging gains for the fourth quarter of 2024. The analyst's commentary underscores the company's consistent execution in the field and strategic management decisions that align with its financial objectives.
In other recent news, Range Resources has seen several adjustments to its stock outlook from various analyst firms. BofA Securities upgraded the company's stock from Neutral to Buy, raising the price target to $45 due to strong fundamentals and growth potential.
In contrast, RBC (TSX:RY) Capital Markets retained its Sector Perform rating but increased the price target from $35 to $40, reflecting improved sentiment regarding natural gas prices. Meanwhile, Stephens raised its price target for Range Resources from $37 to $39, anticipating continued growth in international natural gas liquids demand.
In terms of financial performance, Range Resources reported steady Q3 results, maintaining a production level of 2.2 billion cubic feet equivalent per day and forecasting similar levels for Q4. The company also managed to surpass previous annual average production guidance, landing around 2.17 billion cubic feet equivalent per day.
Range Resources has also made significant investments, spending $156 million in Q3, which supported dividends, share buybacks, and a significant reduction in net debt. Moving forward, the company plans to continue its operational efficiency with two horizontal rigs and maintain a single frac crew in 2025, emphasizing capital flexibility.
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