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A rise in natural gas liquids prices has boosted Antero Resources Corp (NYSE:AR) stock by more than 17 percent since early September, but one Wall Street analyst now says the Antero rally has run out of steam.
The Analyst
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BMO Capital Markets analyst Phillip Jungwirth downgraded Antero from Outperform to Market Perform and reiterated a $21 price target.
The Thesis
The rally in NGL prices is fully priced into Antero shares, and the stock is lacking an obvious long-term catalyst, Jungwirth said in the Friday downgrade note. (See his track record here.)
“While a mark to market of the NGL strip (vs. 8/13) results in a 12-percent/6-percent increase to our 2019/20 EBITDAX estimates, the sustainability of the rally is less certain, while weak 2020-forward natural gas prices remain a drag on net asset value,” the analyst said.
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Although Antero is up just 2.4 percent in overall in 2018, the stock has outperformed dry-gas peers EQT Corporation (NYSE:EQT) and Cabot Oil & Gas Corporation (NYSE:COG) by more than 20 percent year-to-date.
At its current price, Jungwirth said Antero is now valued in-line with the rest of the Marcellus group.
It may be difficult for Antero to hit both its 2019 production targets and spending targets, Jungwirth said. While the company’s ongoing performance review could result in a roughly $500-million buyback plan, Jungwirth said the company’s primary goal of simplification will likely not be a bullish catalyst for the stock.
Price Action
Antero stock traded lower by 3.6 percent on Friday following the downgrade.
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Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.