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On Monday, BMO Capital analysts reiterated an Outperform rating on EOG Resources (NYSE:EOG) stock, maintaining a price target of $135.00. Currently trading at $108.57 with a P/E ratio of 10.04, InvestingPro analysis suggests the stock is undervalued. The analysts highlighted EOG’s recent acquisition of Encino, which strengthens its position in the Utica region. They believe this move enhances the company’s inventory and aligns with its portfolio average in terms of returns.
The analysts noted that EOG Resources’ valuation remains below its trading level, with strong financial accretion driven by cash utilization. With an impressive financial health score of "GOOD" and more cash than debt on its balance sheet, according to InvestingPro data, the company maintains solid fundamentals. The analysts mentioned that future stock buybacks might be moderated due to this acquisition.
BMO Capital emphasized that Encino’s acreage enhances EOG’s existing operations, and the company’s leading operational capabilities are expected to add value. The analysts also pointed out that the Utica region’s commodity mix has improved, offering more in-basin gas demand and takeaway opportunities for the Appalachia area.
Overall, the analysts remain positive on EOG Resources, citing the company’s strengthened foothold in the Utica and its potential for continued growth.
In other recent news, EOG Resources has finalized its acquisition of Encino Energy, significantly enhancing its position in the Utica shale. The deal, valued at $5.6 billion, was financed through a combination of cash and debt, adding 675,000 net acres to EOG’s portfolio. This acquisition is projected to increase EOG’s cash flow per share estimates for 2026 by 8-9% and is expected to be 10% accretive to EBITDA and 9% accretive to free cash flow. Analysts from RBC Capital, Raymond (NSE:RYMD) James, and BMO Capital Markets have maintained positive ratings on EOG Resources, citing the strategic value and financial benefits of the acquisition. Raymond James has raised the price target for EOG Resources stock to $158, while BMO Capital Markets and RBC Capital have set targets of $135 and $145, respectively. In contrast, JPMorgan has maintained a Neutral rating with a price target of $123, expressing concerns about the sustainability of long-term cash flow and returns. EOG Resources has also increased its dividend by 5% to $1.02 per share. Additionally, German asset manager Union Investment has divested from EOG Resources, citing insufficient commitment to climate targets.
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