On Tuesday, RBC (TSX:RY) Capital Markets reinstated coverage on EQT Corporation (NYSE:EQT (ST:EQTAB)), issuing a "Sector Perform" rating along with a price target of $49.00. The move follows a hiatus in coverage and comes after EQT's merger with ETRN, which transformed it into an integrated Appalachian-focused natural gas company.
Currently trading near its 52-week high of $48.02, EQT boasts a market capitalization of $26.57 billion and trades at a P/E ratio of 65.85. InvestingPro analysis suggests the stock is currently trading above its Fair Value.
The analyst at RBC Capital highlighted EQT's position as a core long-term holding in the natural gas sector. However, they anticipate the stock to trade in line with its peers, attributing this to the company's relative valuation.
The merger with ETRN has been a significant step for EQT, as it now operates as an integrated entity within the natural gas market. The company has demonstrated strong performance with a 17.25% year-to-date return, and according to InvestingPro, maintains a modest dividend yield of 1.41%.
EQT's financial outlook appears competitive within the industry, with RBC Capital estimating a 2025-2026 corporate break-even point at $2.40-2.45 per thousand cubic feet (Mcf). This break-even estimate positions EQT favorably against its natural gas peers, largely due to the benefits derived from its midstream ownership.
In addition to the strategic merger, EQT has recently monetized a portion of its midstream ownership. This transaction is seen as a positive move by RBC Capital, as it is expected to expedite EQT's debt reduction efforts and potentially lead to increased returns for shareholders. The company's financial strategy and operations continue to evolve as it adjusts to market conditions and capitalizes on its industry position.
In other recent news, EQT Corp has seen a number of significant developments. Mizuho (NYSE:MFG) has increased the price target for EQT Corp to $48.00, following a joint venture agreement with Blackstone (NYSE:BX). This deal, involving the monetization of a portion of EQT's midstream assets for $3.5 billion, has brought the company's total cash proceeds from asset sales to $5.25 billion. This positions EQT closer to its debt reduction goal of $7.5 billion by 2025.
In addition, EQT Corp reported strong third-quarter earnings, exceeding expectations due to increased production volumes and reduced capital expenditure. Piper Sandler adjusted EQT's stock price target to $34.00, taking into account the sale of non-operated assets and an increased value attributed to EQT's midstream assets.
EQT also 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. Furthermore, EQT reported net-zero Scope 1 and 2 greenhouse gas emissions, achieving this milestone ahead of its 2025 goal. These recent developments highlight EQT's strategic growth and commitment to operational excellence.
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