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Stephens initiated coverage on EOG Resources (NYSE:EOG) with an Equal Weight rating and a price target of $137.00 on Tuesday. According to InvestingPro data, this target aligns closely with the stock’s Fair Value, suggesting the shares are currently fairly valued.
The research firm cited EOG’s strong balance sheet and projected free cash flow of approximately $4 billion, positioning the company to aggressively repurchase shares following a 7% decline in the stock year-to-date. This financial strength is reflected in EOG’s impressive current ratio of 1.87x and minimal debt-to-capital ratio of 0.07x.
EOG recently increased its dividend, which now yields 3.31%, and has maintained dividend payments for 36 consecutive years - even longer than previously reported. InvestingPro analysis reveals 8 additional key insights about EOG’s financial health and growth prospects.
Stephens expects capital efficiencies to continue improving as longer laterals reduce EOG’s peer-leading Delaware Basin and Eagle Ford well costs, while noting the company could shift development toward gas-weighted assets following the recent Encino acquisition if natural gas markets remain strong.
Despite EOG’s financial strength and improving capital efficiency, Stephens views the stock as attractively valued, highlighting it has the highest 2024 free cash flow to enterprise value ratio in its large-cap peer group.
In other recent news, EOG Resources announced a $5.6 billion acquisition of Encino Acquisition Partners, significantly enhancing its presence in the Utica Shale. Analysts from UBS have maintained a Buy rating with a $135.00 price target, noting the acquisition’s strategic benefits despite an increase in net debt. Jefferies also raised its price target for EOG Resources to $148.00, citing higher-than-expected free cash flow improvements and operational efficiencies from the acquisition. Bernstein SocGen Group has kept a Market Perform rating, with a price target of $144.00, and emphasized the acquisition’s alignment with EOG’s resource management strategy. BMO Capital reiterated an Outperform rating, maintaining a $135.00 price target and highlighting the acquisition’s role in strengthening EOG’s inventory and operational capabilities. RBC Capital also reaffirmed an Outperform rating with a $145.00 price target, projecting increased cash flow per share estimates for 2026 due to the acquisition. The acquisition was financed through a combination of cash and debt, and EOG’s net debt to EBITDA ratio remains below 1.0x, indicating a solid financial position. The transaction is expected to boost EOG’s production levels significantly, with scaled development anticipated to begin in 2026.
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