Stephens lifts Range Resources stock target to $43 on NGL outlook

On Wednesday, Stephens analyst Mike Scialla updated the investment firm’s outlook on Range Resources Corporation (NYSE:RRC), increasing the price target to $43.00 from the previous target of $39.00. The Overweight rating on the company’s shares was reaffirmed, indicating a continued positive stance on the stock’s performance potential. According to InvestingPro data, analyst targets for RRC range from $22.50 to $47.00, with 13 analysts recently revising their earnings estimates upward for the upcoming period.

The adjustment in the price target comes as Stephens revises its net asset value (NAV) per share estimate for Range Resources. This revision is primarily driven by an updated forecast for natural gas liquids (NGL) prices. Stephens now anticipates NGL prices to be 36% of West Texas Intermediate (WTI) crude oil prices from 2025 onwards, a rise from the previous estimate of 34%. The company has demonstrated solid financial performance, with InvestingPro showing a healthy gross profit margin of 40.2% and an EBITDA of $1.12 billion in the last twelve months.

The analyst’s commentary highlighted the recent trends in NGL prices, particularly propane, which are showing signs of normalization when compared to crude oil prices. This shift is attributed to the market’s recovery following consecutive warmer-than-average winter seasons in 2022/2023 and 2023/2024, which had previously impacted demand and pricing.

Range Resources Corporation, a Texas-based company, is primarily engaged in the exploration, development, and acquisition of natural gas and oil properties. The company’s operations are focused on stacked-pay projects in the Appalachian Basin.

The revised price target reflects a more optimistic view of the company’s value, considering the expected improvement in NGL prices. This is a significant factor for Range Resources, as NGLs like propane constitute a key component of the company’s product mix. The updated forecast suggests that Stephens expects a more favorable pricing environment for Range Resources’ production, which could positively influence the company’s financial performance.

In other recent news, Range Resources has been the subject of several analyst adjustments. JPMorgan reiterated an Underweight rating on Range Resources, forecasting a straightforward fourth quarter for 2024 with production and financial results aligning with market expectations. The company’s anticipated fourth-quarter production is projected at 2.20 billion cubic feet equivalent per day (Bcfe/d) with capital expenditures of $157 million. JPMorgan also estimates Range Resources will report earnings per share (EPS) and cash flow per share (CFPS) of $0.62 and $1.26, respectively, surpassing the Street’s estimates.

In contrast, BofA Securities upgraded the company’s stock from Neutral to Buy, raising the price target to $45 due to strong fundamentals and growth potential. BofA Securities anticipates that in 2025, Range Resources is likely to use some of its drilled but uncompleted (DUC) well capacity, driven by strong pricing observed during the winter season.

RBC Capital Markets retained its Sector Perform rating but increased the price target from $35 to $40, reflecting improved sentiment regarding natural gas prices. Meanwhile, Stephens raised its price target for Range Resources from $37 to $39, anticipating continued growth in international natural gas liquids demand. These are among the recent developments at Range Resources.

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