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Wednesday, Equinor ASA (NYSE:EQNR:NO) (NYSE: EQNR) shares faced a downgrade in their stock rating from ’Buy’ to ’Sell’ by Redburn-Atlantic. The firm also reduced the price target for Equinor from NOK330.00 to NOK230.00. The downgrade was influenced by concerns regarding the company’s financial stability amid a lower oil price forecast by the firm. According to InvestingPro data, the stock is currently trading near its 52-week low, with a P/E ratio of 7.56 and an attractive dividend yield of 9.01%.
Redburn-Atlantic’s analysis suggests that Equinor’s financial structure is likely to be significantly impacted by the revised oil price expectations. The firm anticipates a swift increase in the company’s net debt and expresses doubts about the continuation of Equinor’s share buyback program beyond the year 2025. However, InvestingPro analysis shows the company maintains a moderate debt level with a debt-to-equity ratio of 0.71 and a healthy current ratio of 1.48, indicating strong liquidity.
The analyst at Redburn-Atlantic highlighted that the previous optimistic outlook for Equinor, largely based on natural gas prices, is losing momentum. This change in perspective comes as the market expects a considerable influx of new liquefied natural gas (LNG) capacity starting in 2026, which could alter the industry’s dynamics.
Following the adjustments to Equinor’s earnings projections, Redburn-Atlantic now finds the stock to be overvalued when compared to its peers. The assessment is based on both absolute terms and relative metrics, leading to the recommendation downgrade from ’Buy’ to ’Sell’.
Equinor has not issued any public statement in response to the rating change and the new price target. The company’s stock performance in the upcoming period will be observed with interest by investors, as they consider the implications of Redburn-Atlantic’s revised outlook.
In other recent news, Equinor ASA reported a significant 35% year-over-year increase in operating cash flow during the third quarter, showcasing strong operational performance. However, Erste Group analysts downgraded Equinor’s stock from Buy to Hold, citing concerns about a potential decline in sales for 2025 and reduced investment in renewable energy. The company’s strategic shift could affect its share buyback activities in 2025, possibly impacting investor returns. Meanwhile, Equinor’s Empire Wind 1 offshore wind project has been halted due to insufficient analysis by the Biden administration, despite its projected cost of around $7 billion. The project, located off New York City, was initially approved in November and was set to begin operations in 2027.
Additionally, Equinor is exploring market interest in its Vaca Muerta assets in Argentina, including stakes in the Bandurria Sur and Bajo del Toro Norte areas. Wood Mackenzie has valued Equinor’s stake in Bandurria Sur at approximately $0.9 billion and in Bajo del Toro Norte at around $0.4 billion. In another development, British Prime Minister Keir Starmer indicated support for the Rosebank oil and gas field, a project involving Equinor, despite previous legal challenges. Lastly, Equinor corrected a clerical error in its dividend information with the SEC, ensuring accurate financial disclosures for investors.
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