Thursday, JPMorgan has initiated coverage on Expand Energy (NASDAQ:EXE) shares, assigning the company an Overweight rating and a price target of $112. The new coverage comes with a positive outlook on the natural gas producer, which emerged from the merger of Chesapeake Energy (NYSE:CHK) and Southwestern Energy (NYSE:SWN) in October 2024.
Expand Energy, with a precise market capitalization of $24.32 billion, has become the largest natural gas producer in the United States. The company’s strategic position in the Haynesville and Appalachia basins offers investors a significant exposure to the increasing demand for natural gas, which is being driven by developments in LNG, electrification, and AI/data centers.
As one of only two publicly traded exploration and production companies in the Haynesville area, Expand Energy is noted for its potential growth due to its proximity to the rising Gulf Coast LNG export capacity. InvestingPro analysis reveals the company maintains a healthy financial position with a strong current ratio of 2.0 and operates with a moderate debt level.
The firm is committed to rewarding its shareholders, promising a substantial return through a $2.44 per share annual dividend, which translates to a current yield of 2.32%, and through share buyback programs. According to InvestingPro, which offers 14 additional investment tips for EXE, the company’s stock generally trades with low price volatility, making it an attractive option for income-focused investors.
In the previous year, the legacy Chesapeake Energy component of Expand Energy managed natural gas production levels cautiously, allowing a decline in a challenging market while building approximately 1.0 Bcf/d of productive capacity.
For the year 2025, Expand Energy has provided a conservative guidance, aiming to reach production volumes of around 7 Bcf/d by capitalizing on the productive capacity established in 2024. The company anticipates maintaining these production levels with a capital expenditure of roughly $2.8 billion.
JPMorgan expects that Expand Energy will likely experience moderate production growth in response to rising natural gas demand and LNG exports. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels, though analyst targets range from $86 to $146 per share, reflecting diverse views on the company’s growth potential.
Looking ahead to the fiscal year 2026, JPMorgan estimates that Expand Energy could achieve production of 7.44 Bcf/d, indicating a year-over-year growth of 7%. This is expected to be accomplished with a capital expenditure close to $2.9 billion, while concurrently returning 6% of the market cap to shareholders. This forecast underscores JPMorgan’s confidence in Expand Energy’s strategy and its potential for growth in the natural gas market.
In other recent news, Expand Energy has seen several significant developments. Citi analysts have raised the price target for Expand Energy to $125 due to strong fundamentals. The company’s discretionary cash flow is now expected to be approximately $802.3 million, slightly below the consensus estimate of around $830.4 million.
Benchmark analysts have also maintained a positive outlook on Expand Energy, revising their fourth-quarter earnings per share and EBITDA estimates upwards to $0.30 and $807 million, respectively. The revision accounts for the integration of the liquids stream from the merger with SWN.
Mizuho (NYSE:MFG) Securities has reiterated its Outperform rating on Expand Energy shares, with a price target of $128. This follows the company’s preliminary outlook for 2025, highlighting benefits from capital efficiencies and synergies from its recent acquisition of Southwestern Energy.
UBS has adjusted its financial outlook for Expand Energy, reducing the stock’s price target from $123.00 to $119.00, but maintaining its Buy rating. Lastly, Expand Energy has successfully completed an underwritten public offering of $750 million in senior notes due in 2035. These are among the recent developments that investors should consider when evaluating Expand Energy.
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