Bullish indicating open at $55-$60, IPO prices at $37
Investing.com -- Barclays initiated coverage of CNX Resources (NYSE:CNX) with an Equal weight rating and a $33 price target, saying the U.S. natural gas producer’s hedging strategy and shrinking inventory depth could constrain future upside, even as gas prices show signs of improvement.
The firm acknowledged CNX’s differentiated approach, marked by heavy hedging and aggressive share buybacks, which has delivered cash flow stability and helped reduce the company’s share count by roughly a third since 2021.
But Barclays (LON:BARC) said that strategy now limits flexibility, especially with 77% of 2026 volumes and nearly 60% of 2027 volumes already locked in at prices well below current futures.
This more rigid hedging profile limits CNX’s upside participation in a structurally tightening gas market, according to the analyst saying the company’s elevated leverage, 1.8 times net debt to EBITDAX versus a peer average of about 0.5 times, reinforces the need to hedge and further reduces room to maneuver.
Barclays flagged concerns about CNX’s capital efficiency beyond 2025, noting that a short-term boost from its Apex acquisition and associated wells could mask longer-term challenges.
The firm expects production to decline and capital expenditures to rise from 2026, pressuring efficiency.
CNX’s core inventory also appears increasingly stretched, according to the note. While the company continues to draw from its Southwest Pennsylvania Marcellus position, the most productive, liquids-rich assets are nearing exhaustion.
Barclays estimates only about eight years of Tier 1 drilling locations remain at current activity levels, with future growth relying more on deeper, higher-cost Utica wells in Central Pennsylvania.
The bank also sees limited upside from CNX’s New Technologies unit, which generates about $75 million in annual free cash flow through coal mine methane recovery and renewable energy credits. Regulatory changes—especially the rollback of hydrogen tax incentives—have curtailed growth prospects for this segment, Barclays said.