On Monday, BofA Securities revised its stance on Range Resources (NYSE:RRC), elevating the stock's rating from Neutral to Buy and increasing the price target to $45 from the previous $34. This adjustment reflects the firm's recognition of Range Resources' strong fundamentals and its potential for growth, particularly in the context of current market dynamics.
The stock, currently trading near its 52-week high of $39.33, has demonstrated robust momentum with a 25% return over the past year.According to InvestingPro analysis, Range Resources shows strong financial health metrics, with 8 additional key insights available to subscribers.
The analyst at BofA Securities highlighted that Range Resources has consistently been a solid performer, with a low break-even point and a substantial inventory. The company, with a market capitalization of $9.2 billion and healthy gross profit margins of 40%, maintains strong operational metrics.
The company's multiple, at 6.5 times enterprise value to debt-adjusted cash flow (EV/DACF), is slightly above the peer average of 6.4 times. Despite a 21% increase in the stock's value since the initial rating in October, Range Resources has underperformed compared to the average 34% gain seen across U.S. gas exploration and production companies. This discrepancy is seen as an opportunity for investors to buy into the stock.
The firm anticipates that in 2025, Range Resources is more likely to use some of its drilled but uncompleted (DUC) well capacity, driven by strong pricing observed during the winter season and progress at the Plaquemines facility. In the first half of the year, Range Resources is expected to continue securing higher-than-average natural gas liquids (NGL) realizations. This scenario is projected to persist until additional takeaway capacity becomes available at Mont Belvieu in the second half of the year.
BofA Securities expects that the capital expenditure for Range Resources will remain roughly in line with 2024 levels. This financial discipline, combined with the operational opportunities outlined, underpins the decision to upgrade the stock to a Buy rating and set a higher price target of $45.
The new target suggests a significant upside from the previous valuation, signaling confidence in the company's future performance. Investors should note that Range Resources will report its next earnings on February 19, 2025.For comprehensive analysis and detailed valuation metrics, including exclusive Fair Value calculations that suggest the stock may be overvalued at current levels, visit InvestingPro.
In other recent news, Range Resources Corp (NYSE:RRC) reported an impressive Q3 performance, maintaining a production level of 2.2 billion cubic feet equivalent per day (bcfe/d) and forecasting similar production levels for Q4. The company's annual average production is expected to surpass previous guidance, landing around 2.17 bcfe/d. Additionally, Range Resources invested $156 million in Q3, supporting dividends, share buybacks, and a significant reduction in net debt.
RBC Capital Markets recently increased its price target for Range Resources from $35.00 to $40.00, retaining its Sector Perform rating. The adjustment reflects improved investor sentiment regarding the future of natural gas prices.
Stephens, a financial services firm, increased its stock price target for Range Resources from $37.00 to $39.00, influenced by the anticipation of continued growth in international natural gas liquids (NGL) demand. In other developments, Range Resources plans to continue its operational efficiency with two horizontal rigs and maintain a single frac crew in 2025, emphasizing capital flexibility. These are among the recent developments at Range Resources.
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