Coterra Energy upgraded, Northern Oil and Berry Corp. cut at Piper Sandler
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Coterra Energy (NYSE:CTRA) was upgraded to Overweight from Neutral with a $35 price target, raised from $30, at Piper Sandler, saying Q2 results and updated long-term guidance demonstrate expectations from continued strong execution across the portfolio.
The company's strategy shift to up-spaced development paired with increased completion intensity is paying off, Piper's Mark Lear wrote, adding the updated long-term guidance which does not bake in ~$200M of potential Marcellus savings being reallocated to the Delaware, paired with a debt-free balance sheet projected by year-end at the strip, will translate to stronger returns to shareholders.
At the same time, Lear downgraded Northern Oil & Gas (NYSE:NOG) to Neutral from Overweight with a $46 PT, after the stock has been one of the strongest E&P performers, and Berry Corp. (NASDAQ:BRY) to Neutral from Overweight with a $9 PT, saying the company's acquisition strategy and new permit moratorium results in "opaque visibility" for the business.
Lear also maintained his Overweight rating on Devon Energy (DVN), saying while the last several quarters have raised concerns on execution, inventory depth and efficiency, the stock has been a big laggard YTD, but those concerns are "largely priced into the stock, and we like the operational set up into H2 2023 with what appears to be a big slug of New Mexico high-grading on the way."
The analyst's favorite E&P names remain the same: Pioneer Natural Resources (PXD), Diamondback Energy (FANG), Chord Energy (CHRD), Permian Resources (PR) and EQT (EQT).
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Stock price return: Up 22.5% YTD, up less than 1% in the past 12 months