EOG, Range Resources, Gulfport Energy upgraded as Mizuho sees more upside
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EOG Resources (NYSE:EOG) +2.2% in Friday's trading as Mizuho upgraded the stock to Buy from Neutral with a $146 price target, as the firm reshuffled ratings in the energy sector to favor large-cap exploration and production names and gas-focused E&Ps over refiners and international oil companies.
EOG (EOG) returned 128% of free cash flow in Q1 with a $310M share buyback that answered investor calls for more aggressive cash returns given both high FCF margins and cash on hand, Mizuho analyst Nitin Kumar noted.
Given EOG's (EOG) indicated commitment to more cash returns and its operational track record, Kumar believes the stock's modest premium to peers underappreciates near-term value.
Along with EOG, Kumar also raised Range Resources (NYSE:RRC) and Gulfport Energy (NYSE:GPOR) to Buy from Neutral, and added Devon Energy (DVN) to the firm's Top Picks, alongside Coterra Energy (CTRA) and Diamondback Energy (FANG).
Kumar called Range Resources (RRC) "one of the leaders in terms of capital efficiencies (driven by a low base decline rate), cash margins, inventory depth and inventory quality" in its coverage of gas-focused E&Ps.
The analyst also downgraded PBF Energy (PBF) to Neutral from Buy and removed Exxon Mobil (XOM) from the Top Picks, turning more cautious on U.S. refiners and IOCs.
Generally, the recent weak performance of U.S. oil and gas stocks is at odds with the messaging from individual companies, Kumar said, seeing differentiated value in his coverage universe with 37% upside on average.
More on EOG Resources:

Financial and valuation comparison to sector peers
Analysis: EOG: Getting Gassier, Expect Lower Income This Year
Stock price return: Down 7% YTD, down 1.5% in the past 12 months