Monday, Mizuho (NYSE:MFG) raised the price target on EQT Corp. (NYSE:EQT (ST:EQTAB)) to $48.00, up from the previous $45.00, while maintaining a Neutral rating on the stock. The adjustment follows EQT Corp.'s recent announcement of a joint venture (JV) agreement with Blackstone (NYSE:BX), involving the monetization of a portion of its midstream assets for $3.5 billion.
The transaction has brought EQT's total cash proceeds from asset sales to $5.25 billion, surpassing the initial target of $3-5 billion set after the separation from ETRN. This development positions EQT closer to achieving its debt reduction goal of $7.5 billion by the end of 2025.
Under the terms of the JV agreement, Blackstone will receive approximately 60% of the free cash flow (FCF) from the midstream assets between 2025 and 2037. This arrangement will remain until Blackstone reaches a minimum return threshold of about 7.875% on its initial investment. EQT retains ownership rights to the Mountain Valley Pipeline (MVP) expansion and the Southgate project and holds an option to buy back its stake in 2032.
The analyst from Mizuho commented on the deal's impact on EQT, noting the near-term (NT) accretion to the company's balance sheet as a positive outcome. The new net asset value (NAV) based price target reflects the analyst's updated valuation in light of these recent developments. Despite the positive news, the firm has chosen to maintain its Neutral stance on EQT Corp.'s shares.
In other recent news, EQT Corporation (NYSE:EQT) reported robust third-quarter earnings, surpassing expectations due to increased production volumes and reduced capital expenditure. Piper Sandler, following these results, adjusted EQT's stock price target to $34.00 from the previous $32.00, maintaining a neutral rating on the stock. The raised price target takes into account the sale of non-operated assets and an increased value attributed to EQT's midstream assets.
In addition to the earnings report, EQT has sold non-operated assets in Pennsylvania to Equinor for $1.25 billion. This sale contributes to a projected $3.6 billion in total cash proceeds. EQT also reported net-zero Scope 1 and 2 greenhouse gas emissions, achieving this milestone ahead of its 2025 goal.
Looking ahead, EQT management plans to execute a maintenance program with capital expenditures estimated to be around $125 million less than the previous midpoint of $2.45 billion. This reduction is attributed to increased operational efficiencies and the sale of non-operated assets. These recent developments highlight EQT's strategic growth and commitment to operational excellence.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on EQT Corp.'s financial position and market performance. The company's market capitalization stands at $27.45 billion, reflecting its significant presence in the energy sector. EQT's stock has shown strong momentum, with a 23.03% price return over the past month and a 37.08% return over the last three months, aligning with the positive sentiment following the Blackstone joint venture announcement.
InvestingPro Tips highlight that EQT has raised its dividend for three consecutive years, which may appeal to income-focused investors. Additionally, six analysts have revised their earnings upwards for the upcoming period, suggesting potential optimism about the company's future performance.
However, it's worth noting that EQT is trading at a high P/E ratio of 68.38, which could indicate that the stock is relatively expensive compared to its earnings. This valuation metric aligns with Mizuho's decision to maintain a Neutral rating despite raising the price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for EQT Corp., providing a deeper understanding of the company's financial health and market position.
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