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Investing.com - JPMorgan downgraded Equinor ASA (NYSE:EQNR) from Neutral to Underweight and lowered its price target to NOK240.00 from NOK260.00. Currently trading at $24.28, InvestingPro analysis suggests the stock is undervalued, with a P/E ratio of 8.05 and an attractive dividend yield of 8.62%.
The downgrade reflects concerns about Equinor’s significant re-gearing expected in 2025/26, with JPMorgan noting the company faces a 900 percentage point increase in net debt to capital employed ratio, the highest among European oil companies. However, InvestingPro data shows the company currently maintains a moderate debt-to-equity ratio of 0.82 and a healthy current ratio of 1.47, indicating strong liquidity position. Additional insights are available in the comprehensive Pro Research Report, along with 8 more exclusive ProTips.
JPMorgan highlighted tension in Equinor’s transition from balance sheet supported to free cash flow led distributions, with a 2026 free cash flow yield of 5.7% signaling "diminishing free cash led capacity."
The bank also expressed concern about Equinor’s reliance on European gas as a value driver, noting that Northwest European storage has risen to 65% and JPMorgan Commodities sees re-stocking on track for end-October targets at 84% capacity.
JPMorgan further pointed to Equinor’s "limited hedge owing to upstream oil and gas led portfolio bias," recommending investors prioritize global LNG exposure through Shell and TotalEnergies (EPA:TTEF), which it rates as Overweight.
In other recent news, Equinor ASA has been at the center of several notable developments. The Norwegian energy company, along with partners Var Energi and Inpex Idemitsu Norge, announced an investment of over $2 billion in the North Sea Fram Sor project, which is expected to enhance oil and gas supplies to Europe. Meanwhile, Equinor’s stock has seen mixed reactions from analysts. TD Cowen raised its price target for Equinor from $19 to $21, maintaining a Hold rating, while also reducing its earnings per share estimate for the second quarter of 2025 due to a one-time charge and increased tax rates.
Conversely, Barclays (LON:BARC) downgraded Equinor’s stock from Overweight to Equalweight, citing concerns over its exposure to European gas markets and challenges in its low-carbon investments. Similarly, Morgan Stanley (NYSE:MS) lowered Equinor’s stock rating from Overweight to Equalweight and adjusted its price target to NOK 250 from NOK 285, reflecting a shift in the oil market outlook. Despite these downgrades, Morgan Stanley noted that Equinor’s focus on natural gas presents an opportunity given Europe’s need for LNG cargoes. Additionally, Norwegian oil and gas production in June saw a decline compared to the previous year, yet it surpassed the Norwegian Offshore Directorate’s forecast by 2.3%.
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