UPDATE: Oppenheimer Downgrades Range Resources on Rich Valuation

In a report published Monday, Oppenheimer analyst Fadel Gheit downgraded the rating on Range Resources RRC from Outperform to Perform, and removed the $100.00 price target. In the report, Oppenheimer noted, “We are downgrading RRC to Perform from Outperform and withdrawing our $100 PT based on its high relative valuation, as it is currently trading at the highest P/E and EV/EBITDA multiples among the large E&Ps. Dividend yield and ROACE are among the group's lowest, while net debt ratio is highest. RRC and COG have the highest exposure to the Marcellus, the most attractive unconventional gas play, and although RRC has the largest acreage, COG is a bigger producer with a much higher growth rate. While COG is expected to be FCF positive next year at $4/mcf, RRC needs $5/mcf gas price to be cash flow neutral. Our new estimates reflect updated guidance.” Range Resources closed on Friday at $75.78.