On Wednesday, JPMorgan analyst updated the stock price target for National Fuel Gas Company (NYSE:NFG), increasing it marginally from $69.00 to $70.00, while maintaining a Neutral rating on the stock. The company, currently valued at $5.9 billion, is trading near its 52-week high of $65.18. Parham’s adjustment follows a detailed analysis of the company’s expected financial performance, taking into account the recent volatility in natural gas prices.
According to InvestingPro, the stock currently shows several positive indicators, with 10+ exclusive ProTips available to subscribers, including insights about management’s aggressive share buyback strategy and dividend history.
The analyst’s report indicates a projection of first-quarter fiscal year 2025 earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) to be 5% below the Street’s estimate (STe), attributing this to a 4% decrease in production volumes.
The decrease is expected mainly due to anticipated modest curtailments during the quarter because of weak natural gas prices observed in October and November. Parham forecasts National Fuel Gas’s production to be at 1,034 million cubic feet per day (MMcf/d), slightly lower than the STe of 1,072 MMcf/d.
Despite the lower short-term estimates, the full-year 2025 production estimate of 1,119 MMcf/d aligns with the Street’s expectations and falls within the midpoint of National Fuel Gas’s own guidance range.
On the pricing front, JPMorgan estimates a hedged natural gas price realization of $2.51 per thousand cubic feet (Mcf) for the first quarter, compared to the New York Mercantile Exchange settlement price of $2.79 per Mcf. The company maintains a strong financial position, with InvestingPro data showing an overall Financial Health Score of "GOOD" and an impressive track record of raising dividends for 54 consecutive years, currently yielding 3.16%.
Parham also notes that the company’s shares are trading near a 52-week high and anticipates that National Fuel Gas will continue its share repurchase program, modeling $34 million in buybacks for the quarter. This is part of a strategy to exhaust the authorized $200 million share repurchase plan.
Looking ahead, JPMorgan has raised its full-year 2025 EPS estimate for National Fuel Gas to $6.21, which exceeds the company’s guidance of $5.50-$6.00, based on a gas price assumption of $3.23 per Mcf. This estimate is consistent with National Fuel Gas’s EPS scenario of $6.00-$6.50 at a $3.25 per Mcf NYMEX gas price. The analyst suggests that the company may revise its EPS guidance upward if natural gas prices remain at current levels.
The report concludes with an anticipation of updates from the company regarding the durability of earnings and cash flow growth, well productivity, and the potential data center opportunity in Appalachia. The recent approval of National Fuel Gas’s rate case by the New York Public Service Commission on December 19 is also expected to provide a clearer picture of the company’s utility earnings outlook.
With the next earnings report scheduled for January 29, investors should note that analysts maintain a moderate consensus on the stock, with price targets ranging from $64 to $83. For comprehensive analysis including all 10+ ProTips and detailed financial metrics, access the full Pro Research Report available exclusively on InvestingPro.
In other recent news, National Fuel Gas Co announced its Q4 Fiscal 2024 earnings, reporting an adjusted operating result of $0.77 per share. Despite low natural gas prices, the company recorded a $61 million gain, largely attributed to a strong hedge book. In addition, the company reported a 5% year-over-year production increase, mainly in the Eastern Development Area.
National Fuel Gas also outlined new executive compensation plans, which include long-term incentive grants and short-term incentive opportunities for its top executives. Notably, the incentive plan introduces performance shares linked to environmental goals, aiming to advance the company’s 2030 environmental targets.
In terms of future expectations, Seneca Resources anticipates record production and reserve growth, with production guidance set at 400 to 420 BCFE for Fiscal 2025. The company also projects a strong free cash flow and over 10% compound annual earnings growth through fiscal 2027. Lastly, National Fuel Gas is executing a $200 million share buyback program, demonstrating its commitment to shareholder value. These are among the recent developments happening within the company.
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