How are energy investors positioned?
On Tuesday, Mizuho (NYSE:MFG) Securities updated its outlook on Expand Energy (NASDAQ:EXE), increasing the firm’s price target on the company’s shares to $136.00, up from the previous $132.00, while maintaining an Outperform rating. The stock, currently trading at $111.32 and near its 52-week high of $112.23, has shown impressive momentum with a 38.28% return over the past six months. According to InvestingPro, 13 analysts have recently revised their earnings estimates upward for the upcoming period. The adjustment reflects Mizuho’s anticipation of Expand Energy surpassing first-quarter consensus estimates for EBITDA and cash flow per share (CFPS) by approximately 7% and 12%, respectively.
The positive adjustment is based on the company’s accelerated deployment of its ’productive capacity’ in response to the current strength in natural gas prices. With a market capitalization of $25.9 billion and last twelve months EBITDA of $1.19 billion, Expand Energy has demonstrated significant operational scale. At the end of 2024, Expand Energy reported approximately 80 deferred ’turned in line’ (TIL) wells. Analysts at Mizuho expect that these wells may be brought into production in the first half of 2025, taking advantage of the favorable pricing environment. For deeper insights into Expand Energy’s financial health and growth prospects, consider accessing the comprehensive Pro Research Report available on InvestingPro. In the latter half of the year, the company is anticipated to replenish its drilling program with drilled but uncompleted wells (DUCs), potentially leading to a modest increase in the total 2025 volume projections, which currently stand at approximately 7.0-7.2 billion cubic feet equivalent per day (bcfe/d).
Additionally, Expand Energy has already optimized its 2026 production volumes to approximately 7.5 bcfe/d, with an investment of around $300 million this year to prepare for this expected growth. Mizuho analysts are looking for further comments from the company regarding potential increases in growth capital expenditures in light of the robust gas prices. They are also seeking insights into how the company might handle the return of excess cash amidst the current strong commodity price environment.
The revised price target represents a roughly 3% increase from the previous target, as Mizuho reiterates its Outperform rating on Expand Energy stock. The firm bases its target on a net asset value (NAV) approach, adjusting its estimates to align with the company’s growth trajectory and market conditions. Based on InvestingPro’s analysis, the stock appears to be trading above its Fair Value, with analysts maintaining a strong buy consensus (1.77 rating) and projecting profitability for the current year.
In other recent news, Expand Energy reported its fourth-quarter 2024 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.55, compared to the forecasted $0.43, and revenue of $2 billion, exceeding the anticipated $1.85 billion. This strong financial performance is closely watched by investors as EPS and revenue are key indicators of a company’s profitability and operational efficiency. Additionally, Expand Energy is set to join the S&P 500, replacing FMC Corp (NYSE:FMC), a move that often results in increased demand for the stock from index funds and other investment vehicles that track the index. Benchmark analysts maintained a Buy rating on Expand Energy, with a price target of $93, expecting the company to outperform market expectations for the first quarter. The analysts project an EPS of $1.69 and an EBITDA of $1.19 billion, both figures surpassing consensus estimates. This positive outlook from Benchmark suggests a bullish signal for the company’s stock. Expand Energy’s inclusion in the S&P 500 and the strong earnings results reflect its sustained market performance and growing influence in the large-cap market segment.
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