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On Monday, Mizuho (NYSE:MFG) Securities adjusted its outlook on CNX Resources (NYSE:CNX), increasing the company’s price target to $35 from the previous $34, while sustaining an Underperform stock rating. According to InvestingPro data, CNX currently trades at $29.20, with analysts’ targets ranging from $22 to $41, suggesting mixed sentiment about the stock’s potential. The company’s current EV/EBITDA multiple of 13.5x indicates relatively high valuation metrics. The firm anticipates CNX Resources to fall short of the consensus estimates for the first quarter of 2025, with expected misses in EBITDA and cash flow per share (CFPS) by approximately 6% and 4%, respectively.
The analysis by Mizuho highlights CNX Resources’ distinct approach among its peers in the natural gas sector, particularly its commitment to maintaining a substantial level of commodity price hedges. CNX has hedged around 85% of its natural gas volumes, a move seen as conservative given the generally positive market outlook for U.S. natural gas. InvestingPro analysis shows the company maintains a "Fair" overall financial health score of 2.4 out of 5, with particularly strong price momentum metrics despite recent challenges.
Operationally, CNX Resources has plans to activate eight deep Utica wells on three different pads throughout the year. This strategy is complemented by the company’s recent acquisition of Apex Energy II, which has expanded CNX’s portfolio by roughly 36,000 net acres in Westmoreland County. This acquisition includes 8,600 acres of undeveloped Utica and 12,600 acres of undeveloped Marcellus acreage.
The adjustment in CNX Resources’ price target reflects an update to Mizuho’s Net Asset Value (NAV) model, taking into account the year-end 2024 reserve reporting. The modest 3% increase to the price target to $35 per share is tempered by the firm’s continued Underperform rating for CNX stock. The rating is based on the company’s limited upside from gas prices and the perceived lack of clarity regarding the depth of its long-term reserves. Despite current challenges, InvestingPro data reveals analysts expect significant sales growth this year, with EPS forecasts of $2.36 for FY2025. For deeper insights into CNX’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, which provides detailed analysis of the company’s financial health and market position.
In other recent news, CNX Resources reported a significant earnings miss for the fourth quarter of 2024, with an earnings per share of -$0.97, falling short of the forecasted $0.43. Revenue also did not meet expectations, coming in at $136.58 million against a projected $424.4 million. Despite these financial setbacks, CNX Resources is focusing on coal mine methane monetization and new technology development. Meanwhile, Stephens analyst Mike Scialla upgraded CNX Resources from Equal Weight to Overweight, citing the company’s potential to achieve 100% of his net asset value estimate. Scialla’s revised price target for CNX Resources is now $48, up from $35, reflecting a 37% raise in his NAV estimate. Additionally, Raymond (NSE:RYMD) James upgraded CNX Resources from Underperform to Market Perform, acknowledging the company’s extensive hedging strategy and potential benefits from a bullish natural gas market outlook. CNX Resources continues to face challenges due to hedged prices being significantly lower than the current natural gas strip, but the firm remains optimistic about future performance.
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