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On Thursday, JPMorgan analyst Arun Jayaram increased the price target on Antero Resources (NYSE:AR) stock to $48 from $47, while maintaining an Overweight rating. The stock, currently trading at $41.02, has shown remarkable momentum with a 12.79% gain in the past week alone. According to InvestingPro data, six analysts have recently revised their earnings estimates upward for the upcoming period, suggesting growing confidence in the company’s prospects. Jayaram’s assessment is based on a positive outlook for the U.S. natural gas sector, driven by three key demand trends: the expansion of liquefied natural gas (LNG) export capacity, a rise in power demand due to electrification, and a shift from coal to natural gas.
Antero Resources, with a market capitalization of $12.41 billion, is positioned as a prime beneficiary in this environment, according to Jayaram, due to its low gas price break-even point, strong firm transportation (FT) portfolio, and largely unhedged production profile. These factors could lead to the company generating significantly higher cash flow than current consensus forecasts, potentially triggering a positive cycle of estimate revisions. With a high beta of 3.4, the stock’s volatility could present opportunities for investors seeking exposure to natural gas market dynamics.
For the first quarter, JPMorgan projects earnings per share (EPS) and cash flow per share (CFPS) of $0.87 and $1.73, respectively, compared to the Street’s estimates (STe) of $0.70 EPS and $1.51 CFPS. Investors tracking this stock should note that Antero’s next earnings release is scheduled for April 23, 2025. For deeper insights into Antero’s financial metrics and growth potential, InvestingPro subscribers have access to over 15 exclusive ProTips and comprehensive valuation models. JPMorgan’s forecast for EBITDAX (earnings before interest, taxes, depreciation, amortization, and exploration expenses) is $565 million, which is 12% higher than the Street’s estimate of $503 million.
The production estimate for the first quarter is 3.38 billion cubic feet equivalent per day (Bcfe/d) with a capital expenditure of $173 million, slightly lower in production but with less spending compared to the Street’s estimate of 3.40 Bcfe/d and $190 million in capex. This slight decrease in production from the fourth quarter is attributed to the timing of planned activities, but the full-year 2025 estimate aligns with the company’s guidance.
In terms of pricing, JPMorgan anticipates first-quarter gas realizations before hedging at $3.96 per thousand cubic feet (Mcf), which is higher than benchmark bid-week pricing, and natural gas liquids (NGL) realizations of $45.16 per barrel, exceeding Mont Belvieu benchmark pricing. These forecasts reflect Antero Resources’ leverage to robust gas and LPG markets through its firm transportation portfolio and strategic positioning at Marcus Hook.
Despite bid-week prices of approximately $3.66 per million British thermal units (MMBtu) falling below the average daily gas price of $4.10 per MMBtu in Antero Resources’ recent update, which included first-quarter pricing through March 17, JPMorgan projects the company will generate $372 million in free cash flow (FCF) for the quarter. This FCF is expected to be allocated towards further debt reduction. The company’s last twelve months EBITDA stands at $819.05 million, demonstrating its operational efficiency. Get access to Antero’s complete financial health analysis and Fair Value estimate through InvestingPro’s comprehensive research reports, available for over 1,400 US stocks.
In other recent news, Antero Resources reported an earnings per share (EPS) of $0.48 for Q4 2024, significantly surpassing the analyst forecast of $0.31. However, the company’s revenue fell slightly short of expectations, coming in at $1.17 billion compared to the projected $1.18 billion. Despite the revenue miss, the company demonstrated strong operational performance, driven by improved drilling efficiency and higher production levels. Antero Resources also forecasts over $1.6 billion in free cash flow for 2025, with plans to reduce debt by approximately $500 million. The company anticipates maintaining flat production with a slight increase of 50 million cubic feet per day. Analysts have noted the company’s effective cost management and operational improvements as positive indicators. Additionally, Antero Resources has projected higher premiums in 2026 due to expanding LNG facilities, which could further bolster its financial standing.
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