UPDATE: Stifel Upgrades EQT on Valuation and Ahead of Upcoming Potential Catalysts
In a report published Tuesday, Stifel analyst Amir Arif upgraded the rating on EQT (NYSE: EQT) from Hold to Buy, and named a $100.00 price target.
In the report, Stifel noted, “We are upgrading our rating for EQT to a Buy on valuation and upcoming catalysts. From a valuation standpoint, the recent weakness in the stock has improved valuation/entry point and the relative valuation to its peers remains attractive and should look even more attractive once the utility sale closes at YE13. From a catalyst perspective, (1) 2014 guidance release (mid-December 2013) could provide upside relative to consensus and our estimates given the company's 3Q comments of wanting to accelerate Marcellus development next year, (2) closing of the utility sale (YE13) should reduce net debt and increase 2014 midstream EBITDA, resulting in the marketplace better realizing the valuation improvement, and (3) we expect our increased NAV to be firmed up when the company updates year-end reserves/resources (mid-February 2014). Our target price of $100 reflects a 9.3x 2014 EBITDA multiple, which is reasonable relative to its peers. Finally, on the macro front, natural gas should start seasonally firming up about now and 2014 natural gas price recovery expectations have been reduced already in the futures market, removing a potential disappointment. Bottom line, with the recent weakness and an attractive relative valuation, we believe now is a good time to add to this high quality Marcellus name ahead of upcoming catalysts (2014 guidance, utility sale closing, and year-end resource/reserves) and with natural gas recovery expectations reduced and natural gas potentially starting a seasonal bounce.”
EQT closed on Monday at $83.30.
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