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Investing.com - Mizuho (NYSE:MFG) has reiterated an Outperform rating on Range Resources (NYSE:RRC) with a price target of $46.00, citing the company’s production outlook and free cash flow potential. Currently trading at $37.66, the stock sits within analysts’ target range of $27-$52, and InvestingPro analysis indicates the stock is fairly valued at current levels.
The natural gas producer’s current production of approximately 2.18 Bcfe/d aligns with its full-year guidance of about 2.2 Bcfe/d. Production is expected to increase over the next two quarters, with the fourth quarter projected to be the peak production period for the year. The company has demonstrated solid operational performance, with an EBITDA of $778.56 million in the last twelve months.
Range Resources maintains a positive outlook on the 2026 natural gas market, supported by anticipated demand growth from liquefied natural gas (LNG), industrial sectors, and artificial intelligence operations. Management believes higher prices would be needed on the 2027 futures strip to drive additional production growth in the Haynesville region. InvestingPro data shows the company operates with moderate debt levels and generally trades with low price volatility, making it an interesting option for stable energy exposure. Get access to 6 more exclusive ProTips and comprehensive analysis with InvestingPro.
Mizuho forecasts Range Resources will generate approximately $813 million in free cash flow in 2025 and about $871 million in 2026. After dividend payments, this would leave between $360-390 million annually for share buybacks and debt reduction. The company currently maintains a dividend yield of 0.96% and has shown positive dividend growth of 12.5% over the last twelve months.
The company’s three-year strategic plan aims to add approximately 400 Mmcf/d of production while generating cumulative free cash flow of about $2.5 billion by 2027, maintaining capital spending below 50% of cash flow. With a current ratio of 0.56, the company’s financial health score on InvestingPro is rated as "FAIR," reflecting both opportunities and challenges in its operational strategy.
In other recent news, Range Resources reported its first-quarter 2025 earnings, which exceeded analyst expectations with an earnings per share (EPS) of $0.96, surpassing the forecasted $0.90. However, the company’s revenue fell short of expectations, coming in at $690.6 million against a projected $787.78 million. Despite the revenue miss, Range Resources managed to reduce net debt by $42 million, highlighting its strong cash management. The company generated $183 million in free cash flow, allowing it to pay $22 million in dividends and invest $68 million in share repurchases. Additionally, Citi has raised its price target for Range Resources to $42 from $38, maintaining a Neutral rating. The firm anticipates that Range Resources’ production and capital spending will be at the higher end of their respective ranges, with stability in operating expenses. Citi also expects the upcoming earnings call to focus on drilling productivity improvements and Range Resources’ three-year growth plans. The company’s future production is expected to dip in the second quarter due to maintenance but is projected to increase in the latter half of the year.
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