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On Wednesday, Raymond (NSE:RYMD) James made adjustments to its financial outlook for Coterra Energy (NYSE:CTRA), revising the stock’s price target to $37.00, down from the previous $41.00, while still maintaining an Outperform rating. The revision follows a thorough analysis of the company’s year-end results and a notable decline in oil prices. According to InvestingPro analysis, Coterra Energy appears undervalued at its current market capitalization of $20.54 billion, with the stock trading at a P/E ratio of 17.85x.
The Raymond James analysis highlighted that Coterra Energy surpassed production expectations by 5% compared to Raymond James’ projections and 4% compared to the consensus. Capital expenditure also came in lower than anticipated, with a 6% and 7% beat against Raymond James and consensus estimates, respectively. These results were attributed to quicker cycle times and robust well performance. Moreover, Coterra Energy announced an increase in its base quarterly dividend by 5%, reaching $0.22 per share, which translates to an approximate 3.3% annualized yield. InvestingPro data reveals that the company has maintained dividend payments for an impressive 36 consecutive years, demonstrating strong commitment to shareholder returns.
Looking into the future, Coterra Energy’s three-year outlook suggests a possibility of consistent growth in total production and oil volumes, with capital expenditures remaining relatively stable. Consequently, Raymond James has revised its production estimates upwards for both 2025 and 2026. The firm now expects production to reach approximately 755 thousand barrels of oil equivalent per day (mboe/d) in 2025 and around 780 mboe/d in 2026. These projections are aligned with an anticipated free cash flow yield of approximately 11% relative to enterprise value for both fiscal years.
Coterra Energy’s significant exposure to natural gas is seen as a mitigating factor against the current weakness in oil markets that the industry is experiencing. Despite the lowered price target, Raymond James reaffirmed its confidence in Coterra Energy’s performance, underlining the company’s potential for steady production growth and financial resilience.
In other recent news, Coterra Energy reported fourth-quarter 2024 earnings that exceeded analysts’ expectations with an adjusted earnings per share of $0.49, surpassing the forecast of $0.43. The company’s revenue met projections at $1.4 billion, and oil production increased by 13% year-over-year. JPMorgan raised its price target for Coterra Energy to $36, citing substantial oil and gas volumes and capital efficiency, while maintaining an Overweight rating. UBS also maintained a Buy rating on Coterra Energy, with a price target of $37, following the company’s performance update that indicated higher-than-expected production and capital expenditure. The company has adjusted its strategy to capitalize on favorable market conditions, reallocating funds to its Marcellus development program to enhance natural gas volumes. Coterra Energy’s strategic initiatives include resuming operations in the Marcellus Shale, which UBS sees as a positive move for adjusting natural gas volumes in response to market conditions. The company anticipates maintaining capital expenditures between $2.1 to $2.4 billion annually over the next three years to drive growth. Coterra’s management has highlighted the company’s adaptability and commitment to maximizing shareholder value through efficient capital allocation across its portfolio.
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