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On Thursday, Benchmark analyst Subash Chandra increased the price target for Expand Energy (NASDAQ:EXE) to $112 from $93, while maintaining a Buy rating on the company’s stock. According to InvestingPro data, the stock is currently trading at $113.87, near its 52-week high of $114.03, with analyst targets ranging from $85 to $170. The company has seen impressive momentum, delivering a 35% return over the past six months. Chandra highlighted the company’s stronger-than-expected gas volumes and differentials as the main reasons for the adjustment. According to the analyst, Expand Energy is expected to surpass its first-quarter earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates, raising them to $2.23 and $1.30 billion respectively, from the previous $1.69 and $1.19 billion. InvestingPro analysis shows that 11 analysts have recently revised their earnings estimates upward, with the company expected to achieve profitability this year despite currently operating with moderate debt levels. This forecast is notably higher than the consensus of $1.81 for EPS and $1.22 billion for EBITDA.
Expand Energy has reportedly benefited from robust demand due to cold weather and has managed to avoid the operational disruptions—specifically freeze-offs—that have affected other producers in western basins. The analyst anticipates that production could exceed the guidance of 6.75 billion cubic feet equivalent per day (bcfe/d), due to strong performances in both the Northeast and Gulf Coast regions.
Chandra also noted that gas price differentials in the Northeast were significantly higher compared to the previous year, due to persistent cold temperatures. While Gulf Coast differentials saw a marginal improvement, they were expected to be narrower than the company’s annual guidance of approximately negative $0.40 per thousand cubic feet (mcf). Despite a deflation in April to a wider-than-average discount to the Henry Hub (HH) benchmark, HH prices have surged to $3.96 in April from $3.65 in the last quarter.
The analyst expressed optimism about the recent appointment of a senior global marketing executive at Expand Energy, suggesting that as the largest U.S. gas producer, there are numerous opportunities for the company to increase its margin. With a market capitalization of $26.5 billion and the next earnings report due on May 6, investors seeking deeper insights can access comprehensive analysis through InvestingPro, which offers exclusive Fair Value calculations, 13+ additional ProTips, and detailed financial health scores for informed decision-making. Traditionally, producers have outsourced marketing to third-party entities, which have capitalized on market volatility to realize significant gains. Chandra expects that the company’s direct engagement in marketing could lead to substantial benefits amidst the forecasted volatility due to low inventories, rising exports, supply growth, power demand growth, and potential fuel switching.
In other recent news, Expand Energy reported impressive fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.55 and revenue of $2 billion, exceeding forecasts of $0.43 EPS and $1.85 billion in revenue. Despite these strong results, the company’s stock experienced a decline in after-hours trading. Additionally, Expand Energy announced its inclusion in the S&P 500, replacing FMC Corp (NYSE:FMC), a move that typically garners increased attention and demand from index funds. Mizuho (NYSE:MFG) Securities has raised its price target for Expand Energy to $136, maintaining an Outperform rating, due to expectations of the company exceeding first-quarter consensus estimates for EBITDA and cash flow per share. Benchmark analysts also maintained a Buy rating with a $93 price target, projecting Expand Energy’s earnings per share and EBITDA to surpass consensus estimates. These developments reflect a positive outlook from analysts and significant recognition in the market, highlighting Expand Energy’s robust financial performance and strategic positioning.
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